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Revealed: Top 4 locations driving office demand in Dubai

During Q1 2024, Business Bay led in office transactions, followed by Jumeirah Lake Towers (JLT), Jumeirah Village Circle (JVC), and Silicon Oasis

Revealed: Top 4 locations driving office demand in Dubai

According to the ‘Dubai Commercial Real Estate Market Report’ by CRC, in Q1 2024, total sales transactions in the commercial sector increased from 2,844 transactions in Q1 2023 to 2,918 transactions in Q1 2024. This growth in transaction volume was accompanied by a 16% surge in the total value of sales, rising from AED 19.295 billion to AED 22.328 billion over the same period.

The office and retail sectors in Dubai were key demand drivers, with significant increases in transaction activity. Office transactions increased by 8% compared to the previous quarter, while retail transactions saw a substantial growth of 23%.

The office segment in Dubai also saw a significant trend with a 15% increase in secondary sales prices, reflecting increased demand and value appreciation. This rise highlights the attractiveness of Dubai’s office market to investors and businesses, possibly due to factors like economic stability, infrastructure development, and favourable regulatory frameworks.

Overall, the Q1 2024 data derived from DLD in contrast to Q1 2023 for the city’s commercial real estate sector paints a picture of opportunity. With transaction volumes and total sales values on the rise, coupled with notable increases in secondary sales prices, the market appears poised for continued expansion and investment in the quarters ahead.

Which areas are making all the right noises?

During the first quarter of the year, Business Bay led office transactions in Dubai with 307 transactions, followed by Jumeirah Lake Towers with 220 transactions. Jumeirah Village Circle and Silicon Oasis tied for third place with 41 transactions each.

1. Business Bay

The office and retail segments emerged as significant drivers of this expansion, with both witnessing robust increases in transaction activity. Office transactions increased by 8% compared to Q1 2023, while retail transactions saw an even larger surge of 23%.

2. Jumeirah Lake Towers (JLT)

JLT is another popular choice for office investors and end-users due to its picturesque lakeside setting and diverse range of office spaces. The well-planned community offers proximity to major highways and metro stations, as well as a variety of dining, retail, and recreational options. Businesses looking for accessibility and convenience are drawn to JLT for its desirable location.

3. Jumeirah Village Circle (JVC) and Silicon Oasis

At joint third, JVC and Silicon Oasis also hold appeal for office investors and end-users alike. JVC’s tranquil environment, coupled with its affordable office spaces and proximity to major commercial centres, makes it an attractive option for start-ups and small businesses. On the other hand, Silicon Oasis’s reputation as a technology and innovation hub, along with its state-of-the-art infrastructure and business-friendly environment, draws companies operating in the tech and IT sectors.

The pricing factor

The price per square foot in Dubai’s commercial market has risen significantly, increasing from AED 927 to AED 1062 in Q1 2024, showing a 15% uptick. This surge reflects growing demand and value appreciation in the sector, driven by factors like infrastructure development and investor confidence.

“Stakeholders now have increased opportunities for capital growth and returns, but must make strategic decisions and analyse the market effectively. As prices continue to rise, stakeholders must adapt their strategies to align with the evolving market dynamics,” says Behnam Bargh, Managing Director at CRC.

Dubai: Off-plan sales surges with apartments accounting for 90% of transactions

Leasing sector dynamics

In CRC’s leasing sector analysis comparing Q1 2024 to Q1 2023, there are noticeable changes in tenant leads, reservations, and transactions in Dubai’s commercial real estate market. Tenant leads have increased by 5%, showing continued interest from potential lessees. However, there have been declines in leads for office, retail, and warehouse spaces, with decreases of 13%, 24%, and 89% respectively. These drops indicate a possible decrease in demand or changing tenant preferences within these sectors.

“The rise in rental prices in Dubai’s commercial real estate market is leading clients to consider buying properties instead of renting. The appeal of ownership, along with the potential for savings and investment returns, is driving tenants to explore the option of purchasing as a viable alternative to leasing,” believes Bargh.

Top 5 leasing communities’ offices

  1. Jumeirah Lake Towers (JLT)
  2. Business Bay
  3. DIFC
  4. Dubai Media City
  5. Barsha Heights (Tecom)

Overall, the Q1 2024 data for the city’s commercial real estate sector paints a picture of opportunity. With transaction volumes and total sales values on the rise, coupled with notable increases in secondary sales prices, the market appears poised for continued expansion and investment in the quarters ahead.