The commercial real estate sector in the UAE: strong growth and optimism for the future - News | Khaleej Times | Blog

The commercial real estate sector in the UAE: strong growth and optimism for the future - News | Khaleej Times

The commercial real estate sector in the UAE remains robust, with prospects remaining positive, as shown by a report published on Wednesday. According to the Royal Institution of Chartered Surveyors (RICS) report for the third quarter of2023, key indicators demonstrate the ongoing strength of the commercial real estate market in the UAE..

The overall demand for rentals remains strongly positive with a stable growth of 54%, with the office sector being the strongest, increasing by 60%, followed by retail and industrial, which grew by 53% and 48% respectively. As noted in the report, both tenants and investors continue to show strong growth across all major sectors in the UAE in the third quarter.

RICS Chief Economist Simon Rubinsohn stated: "There are various trends in global real estate according to the RICS Commercial Monitor report for the third quarter, with markets such as Saudi Arabia, the UAE, and India still showing strong performance and expected to continue doing so. Meanwhile, many more mature and investment-friendly markets remain under pressure. Feedback from recent reports indicates that structural issues affecting at least some parts of office and retail spaces still persist.

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This is also reflected in future outlooks, where sectors such as data centers, leisure, multifamily housing, student accommodation, and life sciences are considered the most promising. It is also significant that the divide between the best and the rest is becoming increasingly noticeable, especially regarding offices, where sustainable features are becoming more important for investors and tenants."

A look into the future shows that rental expectations for the next three months have risen from 43% to 61% this quarter - the highest level in nearly ten years. Considering the long-term outlook, rental expectations for the next 12 months are even more optimistic (+66%) - the strongest result since 2014. Additionally, expectations regarding capital value for the next 12 months have also reached their highest point since 2014, with a figure of +71%, significantly higher than +54% in the previous quarter.

Professionals in the region describe the UAE real estate sector as "booming" due to increased interest from Russian investors, influenced by geopolitical events and a surge in activity. The UAE continues to show some of the strongest forecasts for property price and rental growth in the world and seems likely to maintain this trend in the foreseeable future.