26 October 2023, ZAWYA
Occupier demand remains in deeply positive territory across all sectors
Long-term picture looks increasingly positive with near ten-year high on rent expectations
The UAE’s commercial property market remains one of the world’s best performers
The Royal Institution of Chartered Surveyors (RICS) today releases its Q3 2023 Global Commercial Property Monitor, where topline indicators express the continued strength of the United Arab Emirates’ (UAE) commercial property market.
Overall occupier demand remains strongly positive (+54%), with the office sub-sector strongest (+60%), followed by retail and industrial, (+53% and +48%), respectively. Both occupier and investor activity continue to show strong growth momentum across the UAE, with all mainstream sectors experiencing an uplift in Q3.
Looking to the future, overall, three-month rent expectations are up from +43% to +61% this quarter – its highest reading in almost ten years. Looking further ahead, twelve-month rent expectations are even more optimistic (+66%) – its strongest result since 2014. Furthermore, twelve-month capital value expectations also saw its highest measure since 2014 with a +71% reading, up notably from +54% in the prior quarter.
Anecdotal comments from professionals in the region describe the UAE’s real estate sector as “booming” amid increased interest from Russian investors influenced by geopolitical developments, and in an up-cycle. The UAE continues to return some of the strongest headline capital value and rental growth projections worldwide and looks set to continue this trend for the foreseeable future.
RICS Chief Economist, Simon Rubinsohn, said: “Divergent trends are clearly visible in global real estate according to the Q3 RICS Commercial Monitor with markets such as Saudi Arabia, the UAE and India still performing strongly and projected to continue to do so. Meanwhile, many of the more mature and investible markets remain under some pressure. Feedback from the latter suggest that the structural challenges being faced by at least parts of the office and retail estate has further to run. This is also evident in the forward-looking indicators with sectors such as data centres, leisure, multifamily, student housing and life sciences viewed as likely to outperform. Also significantly, the polarisation between best in class and the rest is becoming increasingly visible particularly when it comes to offices with sustainable feature increasingly important to investors and occupier alike.”