Stock JBR Jumeirah beach residence Dubai property
Based on all available indicators, Dubai's commercial real estate can weather any pressures on the global economy. Image Credit: Stefan Lindeque/Gulf News

The first quarter of 2022 marked a record for commercial real estate globally with the market size growing higher than the five-year average. Now, a number of geopolitical challenges are aggravating an economic slowdown and the rising cost of living worldwide.

Despite this, commercial real estate in the UAE is looking up. In Dubai, various initiatives are boosting demand and simultaneously making conducting business easier and more cost-effective.

Here are some of the key macroeconomic trends that will have a bearing on the immediate future of commercial real estate in the UAE.

Changes in consumer behaviour

While the popularity of remote work in the aftermath of of COVID-19 led to a short-term decrease in demand for typical retail spaces and office buildings, currently, most of new and older business districts are running at max occupancy in the UAE.

The upward trajectory is expected to continue between 2022-27. This hints at positives from the new visa schemes introduced for investors and freelancers, which has now enabled people to work from shared and co-working spaces. This is, in turn, giving rise to higher demand for such concepts.

The co-working space in commercial real estate is set to boom as new age businesses grow. Additionally, e-commerce has also grown rapidly, thereby increasing the demand for warehousing and logistics facilities.

Interest rates

Central banks are increasing rates to cool inflation. This can reduce the number of new projects being announced. However the somewhat limited supply of new commercial real estate and increasing demand will offset this challenge and keep prices relatively stable.

One major reason for the limited stock supply is that not many new players have entered the market, and the new supply is mostly dominated by the government and master-developers. At the same time, the UAE’s tourism sector is driving demand for retail spaces, making them an incredibly lucrative investment at the moment.

Economic growth

Many analysts are predicting a global economic slump in the months to come. Businesses may be less willing to invest in expansion in such a scenario. However, no such indicators can be seen in the local UAE market thus far. Stiff competition from Saudi Arabia to attract large global corporations is expected to keep the commercial property market competitive and full.

Also watch out for the bounce that will be there as more cryptocurrency related firms set up shop in the UAE.

The UAE’s property market is known for going against the norm and is often more resilient than many other top-tier global markets. Those in the commercial real estate industry should keep an eye on trend changes and adapt accordingly to remain competitive.