"The UAE commercial real estate market: highest demand in9 years."

The commercial real estate sector in the UAE showed the highest demand for rentals in the second quarter since 2014. A survey conducted by the Royal Institution of Chartered Surveyors revealed that rental demand increased by 56% from April to June, compared to a 53% rise in the previous quarter.

“All three subsectors reported strong demand, with a breakdown of +56% and +48% for the office and retail segments, respectively,” the Rics report states. “The industrial sector leads due to tenant demand, with a figure of +64% - the highest level in nearly 10 years, since the fourth quarter of 2013.”

The UAE has significantly recovered from the slowdown caused by the coronavirus pandemic, thanks to government initiatives and rising oil prices, which have boosted demand for commercial and residential real estate.

Office spaces in Dubai showed an annual growth of 26.2%, the highest rate since the first quarter of 2015, according to a report by ValuStrat released this week. The ValuStrat office space price index increased by 7.9% quarter-on-quarter to 96 points compared to a base of 100 points in the first quarter of 2015.

The demand for office spaces has sharply increased on Al-Rim Island in Abu Dhabi.

The activity in the office real estate market in Abu Dhabi significantly increased in the first half of 2023, reflecting "the city's determination to diversify its economy and serving as a strong incentive to boost investor confidence," according to the latest report from Knight Frank this week. The average rent in Abu Dhabi's free economic zones, including Al Reem, rose by 31% over the past year to as much as 1,600 dirhams ($435.67) per square meter, driven by increased demand from expanding businesses and limited supply of commercial real estate.

“In just the first six months of this year, transactions in commercial office real estate amounted to 1.3 billion dirhams, which represents a 220% increase compared to the same period last year,” said Andrew Love, partner and head of the ME capital markets and OLSS. “It is worth noting that nearly 70% of all transactions in 2023 took place in Al-Rim and Al-Maryah, totaling 919 million dirhams. This surge is driven by the availability of high-quality offerings that are in high demand but are offered in limited quantities throughout the city, as well as the recent announcement of the expansion of ADGM (Abu Dhabi Global Market).”

The report states that the office market in Abu Dhabi is expected to accommodate around 109,500 square meters of additional office space over the next two years in Al Raha Beach, the main part of Abu Dhabi, Al Reem, and Khalifa City, according to the report.

"Overall, the commercial real estate market in the UAE continues to be one of the leading markets in the world, and there are signs that this market will continue to thrive in the near future," reports Rics.

The expectations for office space rental rates over the year are also positive.