In contrast to past years where demand for Grade A office stock in Dubai was tepid, Commercial Real Estate Consultants (CRC) has seen a significant spike in demand in May 2022. The firm says it has observed a resurgence in demand in recent months due to various factors, such a strong post COVID-19 recovery, rising consumer sentiment and pro-business government initiatives. CRC notes this has resulted in a spike in demand for offices from investors looking for yield, as well as end users.
According to a statement, in May 2022 the Dubai Land Department (DLD) saw a 41% increase in commercial office sales compared to May 2021, with an 87% increase in value of properties sold. The result was attributed to more end users looking to leverage strong business conditions for regional and local growth.
CRC said it tracked a 75% rise in commercial office sales compared to May 2021, and a 228% average increase in revenue. One of the key contributors for this was a $14.67mn commercial office space sold by CRC brokers Aleh Baranouski and Umer Iqbal.
Commenting on the sale, Iqbal remarked, “These were the only three consecutive floors of prime A office space available in the market, and one of the largest office sales in a single transaction, in Business Bay in terms of office size, totaling 43,982.95sqft.”
CRC also noted it has observed a 25% increase in client enquiries and transactions in the first two months of Q2, 2022 compared to Q2, 2021. Business Bay and Jumeirah Lake Towers (JLT) both remain the top areas for commercial purchases, as they are the biggest freehold commercial space in Dubai. These areas are fast becoming a hub for medium to large global companies, as well as SMEs looking to house their regional hubs, followed closely by Barsha Heights, the firm pointed out.
“Less desirable buildings in Tier 2 locations, such as commercial properties that are not near metro stations are also seeing a rise in occupancy rates,” explained Andrew Elliott, Head of CRC.
The statement noted that the rise in oil prices has raised growth prospects for the UAE, and the region as a whole. Elliott concluded, “Should the economy continue to strengthen, I anticipate a steady rise in demand across the whole commercial sector.”
In a bid to boost the attractiveness of its Al Thuraya Tower 1 property, ENBD REIT undertook a $6mn refurbishment of the office tower. Earlier, Allsopp & Allsopp also noted that Dubai residential real estate sales volume and values in May 2022 were the second highest on record. Union Square House also said that 25% of homebuyers in Dubai are keen on living spaces that boost their mental health.
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