Why UAE commercial real estate is in high demand
Commercial real estate in the UAE occupies a large share of the market in the kingdom. The authorities of Emirates are doing their best to attract as many investors as possible in this segment by offering interesting projects.
The most popular market is considered to be Dubai. A huge amount of new real estate is being built here, among which are both large-scale projects and small objects. Investments in the housing allow Emirates to actively develop, which in turn contributes to the growing interest of investors from all over the world.
Despite the clear advantage of the real estate under construction, it is actively catching up with the sector of ready-made objects. This, in turn, has created a slight imbalance, where demand lags behind supply. However, this conclusion is only true for housing. As for the commercial market, it cannot yet satisfy everyone, while interest in such properties is regularly growing.
The increase in demand is noticeable especially in the sector of warehousing and sorting facilities, exhibition facilities are also popular. The real rush for such options began during the pandemic and so far the interest has not subsided. At the same time, the supply is limited and the demand does not stop growing, which provokes an increase in the cost per square meter. This situation is favorable for commercial real estate owners and contributes to an increase in investment in this sector.
In order to understand how profitable it is to invest in this market, it is necessary to estimate such an indicator as ROI. It is an index of return on investment and allows you to understand how quickly the money invested will pay off. For the commercial real estate segment in the Emirates, the ROI is one of the highest in the world. In addition, the market is stable, with higher rental yields than in the residential sector. According to experts, investments in commercial real estate in the UAE should be considered in the long term, then they will bring the greatest benefit. It should also be understood that the amount of income depends on the volume of assets, so if possible, it is better to consider large projects.
There is such a phenomenon as a self-sustaining cycle in the commercial real estate market. It consists of the fact that when the value of the property increases, the proceeds also increase with it. And for this, it is necessary for the object to prove itself, to become known among tenants. In this case, the cost of real estate can grow rapidly, which is not the case in the housing sector. In addition, commercial properties are not subject to seasonality, the demand for them increases regularly, while the supply still lags behind.
It should also be remembered that the lease contracts in the segment are signed for a longer period than, for example when renting an apartment or a villa. Thus the owner has a guaranteed income for a year or more and does not think about finding new tenants.