How Is Uae’s Office Real Estate Market Positioned?
In May 2019, the UAE government announced it would soon be possible for foreign entrepreneurs to own 100% shareholding in a locally incorporated business. Total foreign ownership was previously only permitted in the UAE’s free zones, meaning businesses incorporated ‘onshore’ had to be 51% locally owned.
To make things easier for businesses, it was recently announced that 5% of government capital projects will be allocated to small and medium enterprises (SMEs). This comes as part of a drive to encourage them to enter into major project contracts with government agencies and form alliances to compete for government projects.
In November 2018, the UAE government began actively issuing five-year visas to entrepreneurs looking to set up in the country.
All these initiatives have led to increase in demand for office supply in the UAE market.
How Is Dubai’s Office Real Estate Market Positioned?
Currently aimed at Dubai-based SMEs, this move will allow them to receive contracts for projects worth up to AED 400 million. Also, in order to provide SMEs with greater liquidity, those working on UAE government projects will now be paid within 30 days.
Previously, public sector project payments were paid within a 90 day period. In addition, in the run-up to next year’s Expo 2020, the Dubai government has earmarked 20% of all related contracts to SMEs.
The Ruler of Dubai has launched the Sheikh Mohammad Bin Rashid Al Maktoum Fund to finance innovation in the Emirate. The fund supports resident individuals and companies (of all sizes) registered in the UAE, provided that they offer unique and innovative ideas. These ideas can be technological solutions, products, services or processes. Eligible applicants need to have registered their project as intellectual property of the respective individual or company, and the initial stage of the project must already be established.
Dubai Current And Future Office Market Supply, Average Rental Rates And Occupancy Rates, 2013-2025F
The current office stock supply for Dubai increased from ~ million square meters in 2013 to ~ million square meters in 2018, thereby growing at a CAGR of ~ over the same time period.
Carrying out business in UAE was a cumbersome process in the first half of the review period. However, by 2017, the Government of UAE and Dubai introduced various programs to attract businesses to the Emirate.
The future supply of office stock in Dubai is expected to increase from ~ million square meters in 2019 to ~ million square meters in 2025F; growing with a CAGR of ~% in the given period.
The Government of Dubai in 2019 announced that it will soon be allowing 100% Foreign Ownership in Non-Free Zone in order to attract more profitable businesses to the Dubai Market.
Dubai Current And Future Office Real Estate Market Demand, 2013-2025F
Current Demand: Select micro-markets and certain buildings witnessed an increase in enquiry levels and a marginal uplift in occupancy rates while vacancy levels have increased across projects offering secondary space and inefficient floor plans. The rental premium achieved by projects offering a free-zone license was also rationalised (due to dual licensing) thereby expanding the available options for tenants. The demand for office real estate has increased from ~ Million Square Meters in 2013 to ~ million square meters in 2018; growing with a CAGR of ~ over the review period.
Future Outlook: The future demand for Dubai Office Real Estate Market will be pulled by increase in the business activities expected in the future. The future demand is expected to grow from ~ million square meters in 2018 to ~ million square meters; growing with a CAGR of ~ % over the same time period.
How Is Uae’s Retail Real Estate Market Positioned?
Backed by high number of expatriate population and strong consumer base, retail industry is witnessing strong growth in the land of Emirates.
The upcoming Expo 2020 event will drive demand for more retail space as this event awaits a huge number of visitors which is close to ~ million.
The UAE retail sector industry was worth USD ~ billion in 2018.
Store-based retailing will continue to dominate accounting for USD ~ billion in 2018. Non-store retailing which includes online shopping, direct selling, mobile internet, social media, and home-shopping will grow by ~% during the period 2018-2023.
Increased consumerism has given rise to increased faith among people in buying products and services thereby increasing contribution to the retail sector.
The increase in the number of expat population has increased the demand for varied kinds of products in the market.
How Is Uae’s Retail Real Estate Market Positioned?
The market is expected to witness a significant number of super-regional and regional mall supply in the near future.
The increased supply is expected to put pressure on rents and occupancy levels as landlords continue to offer high incentives including rent free periods, fit out contributions and reductions in service charges. In comparison, community centres in densely populated areas have continued to perform well.
Domestic retail demand in Dubai continues to be pressured by the decline in disposable incomes. In 2018, ~% of Dubai residents expect to have the same or less disposable income in 2019, while only ~% expect to have more.
For residents, “Other Malls” (such as community malls, neighborhood malls and convenience malls) and non-mall outlets continue to dominate due to their convenience and proximity to densely populated residential areas.
Dubai Current And Future Retail Supply, 2013-2025F
The gross leasable area for Dubai Retail Space escalated from ~ million square meters in 2013 to ~ million square meters in 2018; growing with a CAGR of ~%. From the years 2013 to 2016, the supply grew with an inclining growth rate due to increased demand.
The gross leasable area for Dubai Retail Space is expected to increase from ~ million square meters in 2018 to ~ million square meters in 2025F; growing with a CAGR of ~%backed by upcoming Expo 2020 which is expected to pull up to 20 million tourists.
Dubai Current And Future Retail Demand, 2013-2025F
Current Demand (2013-2018): The demand for retail space in Dubai increased from ~ million square meters of Gross Leasable Area in 2013 to ~ million square meters of Gross Leasable Area in 2018; growing with a CAGR of ~% over the same time period. The increase in demand for retail space has grown with the increasing number of expatriates in the emirate, infrastructure development, ease in government regulations and improved tourism as well as leisure activities of people. High growth in discretionary spending along with growing young population is the key demand generators in retail sector.
Future Outlook (2019-2025F): The demand for retail space is also expected to rise in the coming future backed by various government initiatives put in place to boost the economy. The UAE ‘Vision 2021’ focuses on the UAE becoming the economic, touristic and commercial capital for more than 2 billion people by transitioning to a knowledge-based economy, promoting innovation and research and development, strengthening the regulatory framework for key sectors, and encouraging high value-adding sectors. These will improve the country’s business environment and increase its attractiveness to foreign investment. The retail space demand is projected to increase from ~ million square meters in 2018 to ~ million square meters in 2025; growing with a CAGR of ~%.
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