Ryan Mahoney (Dubai, UAE): CRC Market Report on Commercial Properties
CenCorp CEO Ryan Mahoney (Dubai, UAE) cofounded the leading agency-owned real estate website in the UAE today. Benefiting from extensive knowledge of the Dubai real estate market, Ryan Mahoney has been heavily involved in several successful startups, including MasterKey, Taqado, and Dubizzle. This article focuses on CRC’s Commercial Property Market Report FY 2021, highlighting how the UAE, and Dubai in particular, continued to see a surge in economic growth, despite the pandemic.
Looking back to 2021, it is clear to see that it marked a major turning point in Dubai’s commercial real estate market. With positive reforms in the Dubai economy, the industry witnessed a rise in both the demand and prices for commercial property, surging past even pre-pandemic levels.
With Dubai’s commercial property market making a virtually full recovery, this boosted the confidence of business owners, making them more optimistic about the future of their enterprises. Throughout 2021, many businesses sought out larger, better commercial spaces, continuing a trend that started long before the pandemic.
With the introduction of a new visa scheme for sector-specific professionals, as well as transitioning to a new Monday to Friday working week in alignment with the rest of the world, Dubai governmental reforms aided economic growth, with a direct positive impact on the commercial real estate market. CRC’s Commercial Market Report FY 2021 highlighted Dubai’s position as the most robust economy in the region. Despite the pandemic, Dubai has retained traction as a highly attractive place for investment.
Office and retail sales in Dubai were up on pre-pandemic levels in 2021, with the total value of units sold that year reaching almost 31 billion, representing a 35% increase on 2020 figures. Whether prompted by the new visa reforms facilitating citizenship and golden visas for investors, or simply the lifestyle, Dubai continued to attract expats and investors from all over the world, boosting demand for commercial property. The resumption of global travel and EXPO 2020 were doubtlessly a contributory factor, with more than six million tourists visiting in the first 11 months of 2021, surpassing 2020’s figures, according to Khaleej Times. As a result, footfall increased significantly for retailers, which in turn spawned increased demand for retail spaces, particularly on street level in communities such as International City and Jumeirah Lake Towers. Compared with 2020, retail transactions increased by 96% in 2021, with the total value increasing to nearly AED 690 million.
Business Bay ranked first in 2021 in terms of the top communities for office sales, recording 166 units. Next came Jumeirah Lakes Towers at 142 sales, followed by Al Barari at 23; Barsha Heights at 20; Dubai Silicon Oasis at 13; and Downtown Dubai at 10.
In retail sales, International City topped the list at 157 units, followed by Jumeirah Lake Towers at 57. Mohammad Bin Rashid City came next at 56, followed by Business Bay at 39; Dubai Marina at 39; Argan at 37; and Jumeirah Village Circle at 18.
According to CRC’s report, both the size and price of offices sold were on an upward trajectory throughout 2021, with the first price increase since 2014 attributed to a combination of increased demand and limited supply of Grade A commercial spaces. CRC put this down to growth in the economy, which surged compared with pre-pandemic performance.
Like many countries, the uncertainty of 2020 had a devastating impact on Dubai’s economy, causing some businesses to downsize, and others to close their doors completely. As the CRC report highlights, as those businesses rebuilt themselves, Dubai saw a sharp increase in demand for larger office spaces. As occupancy for office space increased, this triggered a shortage in stock, which drove the prices up.
2021 was a year of steady recovery in Dubai’s commercial leasing sector. According to CRC data, the number of leasing transactions grew by 15% in 2021 compared with 2020 figures, with the retail sector enjoying the highest increase, up by an impressive 126%. This comes as little surprise, with consumer confidence in the UAE reaching its highest point in a decade in 2021, with overall spending breaching pre-pandemic levels. Although e-commerce continued to show steady growth in 2021, bricks and mortar retail remained buoyant, resulting in an increase in new businesses.
Overall, as the world returns to normality, experts predict that Dubai’s commercial property prices will continue to show steady growth, manifesting increased confidence in the Dubai property market and the country’s economy as a whole.