UAE Commercial Property Sector Records Strongest Demand In A Decade

The latest RICS Global Commercial Property Monitor reveals that occupier demand in the UAE’s commercial property sector has reached its highest level in ten years. The monitor reported an overall figure of +58%, its highest reading since Q2 2014 when it posted +64%. Crucially, demand is exceptionally positive across the sector, with demand for office, industrial and retail property sitting at +74%, +45%, and +53%, respectively.

All key metrics for commercial property remain firmly positive, with rental and capital value expectations remaining stable and strong across all sectors. Crucially, the largest proportion of respondents believe that the market is still in the middle of an upturn phase (38%). However, those who think it has reached its peak increased to 31% – up from 25% in the prior quarter. Conversely, the proportion of those who believe the market cycle is in an early upturn phase increased their size to a quarter of all respondents (25%), up from 14% in Q1. These results indicate that the heightened occupier demand positively impacts perceptions towards the market, giving it a rosier outlook when compared to the last quarter.

Respondents note that Dubai’s population growth contributes significantly to general demand in the built environment. Because of this, a great number of new developments are targeting residential demand, leaving less new supply available for the market’s burgeoning demand for office space. This is believed to be having a positive impact on rental expectations as the gap between the demand and supply of commercial property widens.

RICS Senior Public Affairs Officer, Abdullah Akaish, said:

“The RICS Global Commercial Property Monitor for Q2 2024 highlights that occupier demand in the UAE’s commercial property sector is at its highest in a decade, reaching +58%. Office properties lead with a demand of +74%, followed by retail at +53% and industrial at +45%. Despite growing perceptions that the market may have peaked, with 31% of respondents indicating this belief, the majority (38%) still view the market as being in an upturn. This robust demand is supported by strong rental and capital value expectations, particularly in Dubai where population growth drives demand. Consequently, the gap between supply and demand for office space is boosting rental expectations, solidifying the market’s positive outlook.

“The national impact of this heightened demand emphasizes the UAE’s role as a key commercial hub in the region. Future trends indicate a sustained demand for commercial property driven by demographic growth and economic diversification efforts. Additionally, strategic planning to balance residential and commercial developments will be crucial to maintaining market stability and encouraging further investment.”