21 February 2023, Khaleej Times
Rental prices are not expected to decline over the next few months due to ongoing strong market demand, shortage of available office space
Q. Can a foreign company buy commercial property in mainland Dubai? We plan to open a branch of our business and are looking for office space for 50 staff. It’s a long-term project for software development and sales. What are the rents we can expect to pay (if we can’t buy) and for how long is the lease? We understand that rents are at a record high in the city and are prepared to wait a few months if they don’t come down.
A. Foreign companies are permitted to buy or rent commercial properties in mainland Dubai. As a general guideline for office space, we recommend allowing approximately 80 square feet per person, not including areas like reception, meeting rooms, waiting areas, manager cabins, or kitchens. For example, a company with 50 staff would require at least 4,000 square feet, although the actual amount needed depends on the nature of the business.
Prices vary by location, but in Business Bay, sale prices currently average around Dh1,035 per square foot, a 19 per cent increase from 2021. Office rental prices are around Dh93,560 for the year. Most rental leases for shell and core spaces range from 3-5 years, while fitted offices typically lease for 1-3 years and are renewable at the end of the term.
The real estate market in Dubai continues to strengthen, and we do not expect commercial office rental prices to decline over the next few months. This is due to ongoing strong market demand and a shortage of available, particularly Grade A, office space. With regard to 2022, office transactions specifically climbed by 30 per cent, while the total value of transactions increased by 74 per cent.