UAE’s commercial property sector growing strongly and positive towards the future

Occupier demand remains in deeply positive territory across all sectors


Somshankar Bandyopadhyay

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Photo for illustrative purposes only
Photo for illustrative purposes only

Published: Wed 25 Oct 2023, 4:04 PM

The commercial property sector in the UAE remains strong and the outlook remains positive, a report showed on Wednesday

According to the Royal Institution of Chartered Surveyors (RICS) Q3 2023 Global Commercial Property Monitor, topline indicators showed the continued strength of the UAE commercial property market.

Overall occupier demand remains strongly positive with a growth 54 per cent, with the office sub-sector strongest, marking an increase of 60 per cent, followed by retail and industrial, which grew 53 per cent and 48 per cent respectively. Both occupier and investor activity continue to show strong growth momentum across the UAE, with all mainstream sectors experiencing an uplift in Q3, the report said.

RICS Chief Economist, Simon Rubinsohn, said: “Divergent trends are clearly visible in global real estate according to the Q3 RICS Commercial Monitor with markets such as Saudi Arabia, the UAE and India still performing strongly and projected to continue to do so. Meanwhile, many of the more mature and investible markets remain under some pressure. Feedback from the latter suggest that the structural challenges being faced by at least parts of the office and retail estate has further to run. This is also evident in the forward-looking indicators with sectors such as data centres, leisure, multifamily, student housing and life sciences viewed as likely to outperform. Also significantly, the polarisation between best in class and the rest is becoming increasingly visible particularly when it comes to offices with sustainable feature increasingly important to investors and occupier alike.”

Looking to the future, overall, three month rent expectations are up from 43 per cent to 61 per cent this quarter – its highest reading in almost ten years. Looking further ahead, 12-month rent expectations are even more optimistic (+66 per cent) – its strongest result since 2014. Furthermore, 12-month capital value expectations also saw its highest measure since 2014 with a +71 per cent reading, up notably from +54 per cent in the prior quarter.

Professionals in the region describe the UAE’s real estate sector as “booming” amid increased interest from Russian investors influenced by geopolitical developments, and in an up-cycle. The UAE continue to return some of the strongest headline capital value and rental growth projections worldwide and looks set to continue this trend for the foreseeable future.

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