UAE’s commercial property sector prevails in Q3 2023

Industry is resilient and has a promising outlook
UAE’s commercial property sector prevails in Q3 2023
The office sector marks a substantial 60 percent increase is quarter

The UAE is proving its strength in the global commercial property market. A recent report from the Royal Institution of Chartered Surveyors (RICS) highlights the sector’s unwavering strength and bright prospects.

Positive topline indicators

According to the RICS Q3 2023 Global Commercial Property Monitor, the UAE’s commercial property market continues to impress. Topline indicators underscore the sector’s robust performance, signaling a promising future. Therefore, the report reveals that overall occupier demand remains strongly positive, with a growth rate of 54 percent.

Among the various sub-sectors, the office sector takes the lead, marking a substantial 60 percent increase. It is closely followed by the retail and industrial sectors, which grew by 53 percent and 48 percent, respectively. Moreover, the commercial property landscape in the UAE is evidently thriving, with all mainstream sectors experiencing an upswing in Q3.

The report underscores that both occupier and investor activity continue to exhibit robust growth momentum across the UAE. Thus, this growth extends across all mainstream sectors, reaffirming the country’s attractiveness for real estate investment.

Global real estate trends

Simon Rubinsohn, RICS chief economist, noted that global real estate trends are divergent. Regions like Saudi Arabia, the UAE, and India are continuing to perform strongly and are expected to maintain this trajectory.

In contrast, more mature markets face pressure, especially in sectors such as office and retail estate. The report suggests that the structural challenges in these markets are far from resolved. Looking ahead, the report indicates that certain sectors like data centers, leisure, multifamily, student housing, and life sciences are likely to outperform.

In terms of future expectations, the report provides encouraging insights. Three-month rent expectations have seen a significant upswing, rising from 43 percent to 61 percent in this quarter. This marks the highest reading in nearly a decade. Furthermore, the 12-month rent expectations are even more optimistic, with a substantial increase of 66 percent. Notably, 12-month capital value expectations have also reached their highest measure since 2014. They recorded readings of +71 percent, a notable increase from +54 percent in the previous quarter.

Read: Middle East Economy Guide: Most expensive villas sold in Dubai

UAE’s booming real estate sector

Industry professionals in the UAE describe the nation’s real estate sector as “booming.” This resurgence is attributed to increased interest from Russian investors influenced by geopolitical developments and an up-cycle in the sector. The UAE consistently offers some of the most robust headline capital value and rental growth projections globally. It appears poised to maintain this trend for the foreseeable future. The UAE’s commercial property sector continues to stand as a beacon of resilience and growth in the ever-evolving global real estate landscape

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