Occupier demand remains strong in UAE commercial property sector: RICS report

The commercial property sector in the UAE continues to display strength and a positive outlook, according to a report released on Wednesday by the Royal Institution of Chartered Surveyors (RICS). The report, titled Q3 2023 Global Commercial Property Monitor, highlights the continued robustness of the UAE commercial property market.

Notably, overall occupier demand remains in deeply positive territory, with a growth rate of 54%. The office sub-sector leads the way with a 60% increase in demand, followed by the retail and industrial sectors with growth rates of 53% and 48% respectively. Both occupier and investor activity show strong momentum across the UAE, with all mainstream sectors experiencing an uplift in Q3.

Simon Rubinsohn, Chief Economist at RICS, highlighted the divergent trends in global real estate, with markets such as Saudi Arabia, the UAE, and India demonstrating strong performance and projected to continue doing so. However, more mature and investible markets are facing some pressure, particularly in the office and retail estate sectors. Rubinsohn mentioned that sustainable features are becoming increasingly important for investors and occupiers in offices.

Looking to the future, the report indicates that three-month rent expectations have increased from 43% to 61% this quarter, reaching its highest reading in nearly ten years. Meanwhile, 12-month rent expectations are even more optimistic at +66%, the strongest result since 2014. Additionally, 12-month capital value expectations have seen a significant increase, with a reading of +71%, up from +54% in the previous quarter.

Professionals in the region describe the UAE’s real estate sector as “booming,” with increased interest from Russian investors influenced by geopolitical developments. The UAE consistently delivers strong headline capital value and rental growth projections, and it is expected to continue this trend in the foreseeable future.