The diverse real estate market in Dubai offers attractive investment prospects, with 2023 seeing the highest number of residential units completed in a decade.
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Commercial and corporate units
The government has launched a number of initiatives to support demand for office space, including the One Free Zone Passport and laws that allow businesses in free zones to expand their operations to the Dubai territory as well.
The relatively low demand for office space has prompted landlords to offer advantageous contract renewal terms, lower rates, longer periods of free rent, and other benefits for new tenants. One of the big drivers in the office market is the growing popularity of co-working spaces.
In light of the new trends, developers are developing flexible plans that they hope will attract SMEs and established companies. District 2020 is the perfect example, reflecting the moment of vogue for co-working spaces.
The residential market
The first government initiative for a new type of supply was launched in the third quarter of 2019, with the announcement of a new Real Estate Planning Committee. The committee is working with the aim of improving the balance between supply and demand, and to do so, it will develop a strategic vision for the next 10 years that will take into consideration all major real estate projects in Dubai.
Builders are adapting to the lower supply already expected; in fact, the number of projects launched from 2019 to date (7,800 units) is the lowest in three years. The residential market is mostly static, with marginal declines in the range of 1 percent for rental and sale prices of apartments and villas.
Trends in the retail sector
Traditional retail spaces are under increasing pressure, while, in contrast, online shopping is not stopping its race to success. As an international distribution hub and logistics leader, Dubai continues to benefit tremendously as demand for logistics space continues to increase.
Retail rates have remained unchanged when compared to the previous fiscal year, and it is estimated that the market will confirm the same current levels as long as manufacturers adapt to the new demand from emerging sectors.
Due to the increase in online shopping, food and beverage outlets and entertainment options in malls are increasing in retail. However, there are also changes in Food & Beverage, with a reduced market for restaurants.
The second half of 2019 saw a sharp increase in demand as e-commerce and logistics companies occupied several warehouses following the opening of international engineering and manufacturing companies in the UAE.
To date, the industrial market is becoming more specialized. Dubai South, for example, is becoming a logistics hub for e-commerce companies. In 2019, demand from international tenants looking for long-term leases has also jumped, particularly for automated centers tailored to their needs, temperature-controlled and with new technologies.
A constantly changing demand
The real estate market in Dubai is adapting to a constantly changing demand. The rise of e-commerce operations in the UAE translates into excellent opportunities for warehouses, logistics and industrial facilities.
The retail sector continues to adapt to an ever-changing landscape, although the proliferation of malls and retail outlets indicates that the sector will remain thriving in the future, due in part to new retail concepts.
Continued interest in residential real estate and the government’s strategic vision will stimulate future growth. Office space also evolves with time and will follow changes in demand from SMEs and emerging sectors.