Market Trends of UAE Commercial Real Estate Industry
Increase in Demand for Office Spaces across Dubai To Drive the Market
The total stock of office units in Dubai stood at nearly 9 million sq. m of GLA in 2021. Around 70,000 sq. m of GLA (Gross Living Area) was added in H2 2021. An additional 70,000 sq. m of quality office space is expected to enter the market by the end of 2022, with some of the notable projects, including the Obsidier Tower.
The majority of the demand for office units came from small units (less than 1,000 sq. m) with a preference for CAT A fit-out rather than shell and core space. Several new initiatives have been launched to boost demand for commercial real estate in Dubai, such as the introduction of the One Free Zone Passport, which allows free zone companies to extend their operations to mainland Dubai. These initiatives are likely to boost demand for offices across the city in the coming years.
Dubai's commercial property market saw a massive increase in the supply of office space. As a result, there was an oversupply in the market, which caused prices to decrease and led to the shutdown of new major commercial developments. However, in the last few years, increasing demand absorbed the majority of this oversupply. Currently, the demand is starting to outstrip supply. With no new major developments on the horizon, this trend is set to continue and boost prices.
Increase in Hotel Real Estate Across Key Cities in the United Arab Emirates
The total number of hotels and similar establishments in Dubai decreased to 755 in 2021 compared to 1,089 in 2020. The tourism sector added 8% to the country's GDP in 2021. Dubai Expo 2020 boosted tourism in 2021. However, it has a long way to go to reach pre-pandemic levels.
The United Arab Emirates continues to dominate the Middle Eastern travel market with its supply and bookings across all travel segments, which was seen in Expo 2020 in October 2021. After the challenging times of the pandemic, the Expo proved a welcome opportunity for those in the hospitality industry. The benefits of this event are already being noticed in the economy. The Emirates' robust new safety measures deployed across various sectors and major initiatives taken by the government have further cemented the country's position as a safe destination for global travelers.
