Compared to residential, the commercial real estate segment can often provide more lucrative investment opportunities, says Angela Gegg, Head of Commercial at Edwards and Towers.
Individuals are generally inclined to invest in real estate for its ability to mitigate risk, and commercial real estate in particular boasts the highest yields, attracting high net worth individuals, entrepreneurs, companies, and Real Estate Investments Trusts (REITS) – all of whom engage in the purchase of large scale property assets.
Indeed, in Dubai investors have injected a great deal of capital into the commercial real estate sector.
To better understand the market, it is important to become familiar with the industry’s definition of commercial. It means offices of course, but also includes: shops, warehouses, restaurants, hospitals, schools, clinics, factories, and retail space.
The employment rate is one of the best indicators for ascertaining the health of the commercial real estate market.
Some of the higher-end properties include hotels, buildings, commercial plots, community centres, and shopping malls – these are generally a target purchase for mid to upper level investors.
I can also tell you first hand – with just under six years as a trained professional spending my days in the field with, clients, landlord’s, government authorities, and developers – that the demand for commercial real estate in Dubai is at a high.
A recent report has suggested that Dubai has one of the lowest unemployment rates in the world…
Commercial developments and Free Zone business hubs are on the rise. Businesses are constantly needing to expand, causing the heightened demand for office and retail spaces. Here are just a few examples of upcoming projects that have caught the attention of both corporate companies and new business set-ups alike.
- Dubai Science Park, a member of TECOM group will be opening its doors in March 2018 with over 500,000 sqft of leasable space. The headquarters is made up of two towers connected by a retail mall with various retail and restaurant options and a wide range of office space.
2. Innovation Hub, a new business park that will also be opening in coming months (set for August 2018). The project boasts 1.8 million sq ft of commercial space with boutique offices, commercial buildings, and retail offerings. The new business park is also a member of TECOM group.
3. Silicon Park, under the Dubai Silicon Oasis Authority, will cover an area of over 1.6 million sqft and is set for completion at the start of 2019. It consists of over 770,000 thousand sqft office space, as well as 195,000 sqft of retail space.
Freehold offices are also in high demand with sales and leasing by investors in the private sector and trusts…
Freehold offices are also in high demand, with sales and leasing by investors in the private sector and trusts. A real estate investment trust (REIT) is a company that owns, and in most cases operates, income-producing real estate. Their mode of operation is like a mutual fund where investors combine their capital to buy a share of commercial real estate and earn income from their shares.
According to the ENBD REIT, as of January 2018, their three latest acquisitions are a retail centre in Silicon Oasis, a commercial office tower in Internet City, and a school located in Dubailand – the three assets stake an average gross yield of 8.4 per cent. Both Investor properties and REIT properties are on the market for lease and the demand from DED zones continues to hold strong.
One of the most significant indicators in trying to understand the commercial market and its subsequent trends is the employment rate in Dubai. This is one of the best indictors for ascertaining the health of the market. A recent report based upon a survey conducted by the Dubai Statistic Centre (DSC) suggests that Dubai has one of the lowest unemployment rates in the world. We have also seen a strong demand for labour accommodation and housing, which itself indicates that the employment rate keeps rising.
Commercial real estate is here to stay and will only continue to grow as the demand is strong with Dubai as a leader for corporate spaces in the Middle East.
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By Angela Gegg, Head of Commercial at Edwards and Towers
