After several challenging months during the pandemic, the commercial property market has started stabilizing in Q3 and reached pre-COVID levels in September 2020. As per Dubai Land Department reports, the market has reached its lowest level in terms of total value and number of units transacted in May this year – only AED504 million. Since then, numbers have continued to rise each month with 635 units transacted in September 2020 with a total value of AED3,645 million. That being said, CRC has seen a 5% increase in sales transactions year-on-year, accompanied by a significant increase in buyers leads.

The number of buyers registered at CRC has increased by 89% compared to Q3 2019. This can be attributed to the fact that we have some of the lowest prices that we have seen in a long time, coupled with an increase in consumer confidence after commercial activities resumed and stabilized in Dubai. A significant number of prospects are not interested in buying immediately, but instead, they are shopping around and waiting for good deals. These low property prices will certainly keep the market active in the following months.

In terms of the top sales communities, Business Bay is still one of the leading communities, with prices per square foot ranging from AED 550 to 900. JLT is the second leading community and the most popular free zone in Dubai with the price range per square foot, going from AED 300 to AED 800. Sales prices per square foot in Barsha Heights are ranging from AED 600 to 700. Behnam Bargh, Director at CRC commented “The current commercial property market trend in Dubai is that companies are mainly looking for fitted and furnished offices to reduce the set-up costs. We also have noticed a higher demand for “A” quality property as clients are looking for better value and higher quality. Finally, an improvement was visible in certain sectors such as e-commerce and healthcare industry after the pandemic.”

The commercial property leasing department has had a particularly active quarter, with a 52% increase in the number of transactions compared to Q3 2019. However, this does not mean we had an influx of new tenants; on the contrary, the number of visitors and new residents has not been increasing over the past few months. The market was kept active by existing tenants looking for better value, upsizing, consolidating smaller offices into one large office, and unfortunately, due to COVID-19, some offices had to downsize. This activity is especially visible in the number of new tenants registered at CRC – 89% increased compared to the same period last year. Nonetheless, we have to keep in mind that many of these tenants are using the market conditions to shop around, and finally extend their contracts with their current landlords at a lower cost.

When it comes to the preferred type of payment, payments with 4 cheques remain to be the most popular option, accounting for 45% of leases in Dubai. This is followed by contracts with one cheque (22%), usually accompanied by more bargaining power for the tenant – paying the lease upfront usually guarantees a better deal on their property.

Overall, with the government restrictions being lifted and economic activities getting back to normal as restaurants, cafes, and retail shops opened for business – the commercial property market has also revived. Whilst there is no denying that there has been a significant disruption in the property market, after such a successful third quarter, we have a much more positive outlook for the future of the market.