Dubai’s Commercial Real Estate Sector
Dubai’s commercial real estate sector offers potentially large profits for skilled investors, often even more so than residential properties. Commercial real estate is attractive to investors because of its potential to mitigate risks while providing high-profit yields. This is why high-net-worth investors and large companies, as well as successful entrepreneurs and real estate investment trusts (REITs), target large-scale property assets. Dubai has seen a spike in capital investments in its commercial real estate market in the past 10 years, but it is important to understand why the city has garnered recognition as one of the most successful real estate markets in the world.
Commercial real estate sectors include shops, hospitals, restaurants, schools, factories, warehouses, retail outlets, and office space. To get a meaningful glimpse into the overall health of the commercial sector, it is sensible to look at the area’s employment rate. As of 2017, Dubai’s unemployment rate was a stunning 0.5 percent, one of the lowest in the world. Such a high rate of employment practically speaks for itself. Naturally, this has led to increased demand for labor housing and accommodations, which also shows that the employment rate continues to improve. Dubai’s commercial real estate sector feeds into and is supported by the burgeoning employment that has soared in recent years.
Mid-level and upper-level investors often target properties like commercial plots, shopping malls, hotels, and well-positioned buildings. These and other commercial properties are at high demand in Dubai in recent years, spurring the launch of more commercial developments. The great success experienced by businesses leads to a growing need for more properties and commercial spaces. Freehold offices are in demand, with both private sector investors and trusts selling or leasing accordingly. REITs operate like mutual funds, allowing investors to pool their resources to buy shares in commercial properties and earn income from dividends. In return, REITs usually operate and maintain the investments and secure profits for its shareholders.
It is clear why Dubai is such a popular place for both foreign and domestic investors who are looking for solid commercial real estate opportunities. The commercial real estate sector is expanding rapidly, building upon the past two decades of strategic and successful investments made by the private and public sectors. Dubai is sure to remain at the top of the commercial investors’ list in the years to come.