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Dubai remains resilient in the face of town turn in the global commercial real estate market, defying low occupancy rates and rental yields worldwide. According to Abdulla Belhoul, the CEO of Tecom Group, the central business district is experiencing high demand, indicating a preference for top-notch offices in a prime location. He also noted the company’s ongoing attraction to multinational companies seeking expansion in Dubai and the region. Tecom Group reported a 6% increase in revenue for the second quarter, with tenants such as Meta Platforms and Alphabet.
In the second quarter, revenue surged to Dhs535.1m ($146mn), and more than 1,500 new tenants were added in the first half of the year, resulting in an occupancy rate of 87%, as stated in a regulatory filing.
The Dubai commercial property market witnessed a significant rise in average occupancy rates, reaching 92.7%, owing to an influx of companies establishing themselves in the city. This has contributed to the revival of the commercial real estate market, putting an end to the multi-year property slump.
According to a recent report by CBRE Group, average occupancy rates escalated to 92.7% from 84.8% in the second quarter due to increased demand and limited availability of quality properties. Additionally, prime commercial real estate rents in Dubai have also seen substantial growth, with increases of up to 17%, according to CBRE.
CBRE reports indicate that the demand in Dubai’s commercial real estate market has driven average asking prices beyond the levels seen in 2019. This stands in stark contrast to the situation in other global cities, where prime real estate in London saw an average increase of only 5%, and the US faces record vacancies as tech giants are offloading millions of square feet of office space.
Investors, on the other hand, are actively seeking opportunities in Dubai, with an office tower in the city’s financial district attracting interest from over a dozen entities worldwide, as reported by Bloomberg.
Tecom Group, operating various business districts in Dubai, including Dubai Media City, Dubai Internet City, and Dubai Studio City, acknowledges the increased construction activity in the region after years of limited development. However, the CEO, Belhoul, predicts that demand will continue to surpass the available supply.
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