Dubai is famed for its tourist appeal and residential investments, as well as being a commercial center that attracts many business individuals from all over the world. This is primarily due to the fact that new initiatives and laws have been introduced in Dubai to create a favorable climate for business owners and entrepreneurs. There are a few well-known business districts to be found in the emirate, including Business Bay, Downtown Dubai, DIFC, Dubai South, Dubai Media City and Dubai Internet City. There are currently around 30 Free Zones (FEZs) operating in Dubai, each serving specific sectors and industries. According to the official website of the UAE government, they are divided into 3 main categories: Dubai Creative Clusters Authority (DCCA), Dubai Merchandise Trade Center (DMCC) and Dubai Free Trade Zones, which specialize in various industries from gold and jewelry to healthcare and manufacturing. Free Zones have different sectors like medicine, education, technology, finance, natural resources, logistics, design and many others. Business owners in free trade zones in Dubai own 100% of the business without a local sponsor/partner. These zones are aimed at bolstering foreign investment and stimulating economic activity in the emirate. In this article, we will review the best areas to buy commercial real estate and do business, as well as the price ranges for them, and what types of commercial real estate are worth investing in.

Things to Consider When Investing in Dubai Commercial Real Estate

First of all, it is essential to know that there is a limited supply of commercial real estate, and it is in high demand. Of course, this segment does not have as many off-plan projects as the residential sector, however, it is equally appealing to investors and lessees. Many international companies require office, warehouse and sorting spaces, as well as corporate properties or co-working units. Secondly, the high return on investment (ROI) is another factor to take into account, due to the increased demand but limited supply, which provokes a surge in prices in the real estate market, allowing you to get the highest possible return on investment for those who already own and lease commercial premises. In Dubai, ROI for commercial real estate ranges from 4% to 8% per year. During the COVID-19 pandemic, warehouses, sorting shops, labour camps and staff accommodation have become increasingly popular with e-commerce companies. These real estate categories can now generate a yield of 9-13%. Thirdly, there is real estate liquidity, which has a significant effect on the indicator of ROI. An example would be income from public parking. This type of asset can consistently bring 9% of ROI, since it is in great demand in the emirate, despite this, its liquidity is at a rather low level. For example, it will be difficult to find a new owner and resell this property, and due to low demand, you will have to lower the selling price drastically, which nullifies all ROI indicators. One must remember that the easier it is to find a new owner (buyer), the higher your income will be. With the right approach, stability and long-term leases, it will allow you to protect your assets, even if they generate a low ROI. Lease contracts for commercial properties are generally concluded for a period of 5 years or more, which will protect you from possible downtime or negative market fluctuations.

Types of Commercial Real Estate in Dubai

The commercial real estate industry in Dubai is very extensive and offers a variety of investment and business options, from fully furnished office spaces to purpose-built factories. Below we have compiled a detailed master guide regarding properties of different economic segments of Dubai, which will allow you to allocate your budget more efficiently to those areas of activity that are most conducive to business development, as well as to estimate how much it will cost you to buy or rent these units.

Offices

Dubai offers a wide range of office spaces to both purchase and rent. In both options, the price depends on the location, size, finishes, and whether they are furnished or not. In this case, Business Bay, Jumeirah Lake Towers, the Sheikh Zayed Road, Deira and Bur Dubai are some of the best areas to buy offices. The selling price for an office space with an area of ​​25-35 square meters starts at AED 250,000 (USD 68,100). As for the lease, offices can be divided by sizes: small (up to 904 sq.ft), medium (904-2,002 sq.ft) and large (over 2,002 sq.ft). The table below provides the average annual rental rates for office spaces in Dubai’s most popular business districts. up to 904 sqft of 904-2,002 sqft of over 2,002 sqft AED 55,000 (USD 15,000) (USD 19,700) (USD 55,000) (USD 11,000) (USD 22,500) (USD 56,000) (USD 9,600) (USD 32,700) (USD 77,500) (USD 6,600) (USD 27,500) (USD 100,200) (USD 5,200) (USD 22,100) (USD 49,600) In addition, areas such as DIFC and Dubai South also offer excellent rental options for commercial real estate, specifically office spaces.

Coworking Spaces

With minimum capital requirements, coworking in Dubai is gaining more and more popularity among start-up businesses and entrepreneurs, as well as freelancers. These commercial properties allow you to design a workspace as a collective office, offering a more comfortable and corporate environment for employees. The lower cost of renting the spaces due to the joint payment will be an undoubted advantage as well. The cost for the use of the properties can be charged hourly, daily and monthly. For instance, in terms of rental options for coworking spaces in areas such as Jumeirah Lake Towers, Business Bay, the Sheikh Zayed Road and Dubai Media City, you can expect an annual rental price starting from AED 10,000 (USD 2,800) to AED 19,000 (USD 5,200). This price is relevant to spaces of 49.5 to 99 sq.ft. Dubai also has several popular single and network coworking spaces like Bureau Dubai, Nest, Our Space, Nook and others. The mentioned companies offer these types of spaces which span across the key areas of Dubai, many of which can be viewed at www.coworker.com. Here you can buy a franchise for one of the existing spaces or acquire an office and design it according to your requirements and preferences. Most of all, these properties are popular with IT specialists and are perfect for conducting thematic lectures and seminars, providing services for licensed companies and as a massage and spa, among other purposes.

Retail Space

Another profitable investment in Dubai is the purchase of shop units and retail spaces. This type of commercial real estate is in demand in any area or community of the emirate and you can buy them both in the secondary and off-plan real estate market. The latter is even more profitable because at time of purchase, the price will be much lower. At present, the real estate market allows you to buy retail spaces in areas such as Jumeirah Lake Towers, Business Bay, International City, Dubai Marina, Meydan, DIFC, Downtown Dubai and Dubai Silicon Oasis. Their area can range from 344 to 9,945 sq.ft, and the sale price of units starts from AED 150,000 (USD 41,000) and above. In addition to the above-mentioned areas, Deira, Al Barsha, Bur Dubai and Jumeirah offer rental options ranging from 99 to 37,996 sq.ft at prices varying from AED 15,000 (USD 4,100) to AED 4,000,000 (USD 1,090,000) per annum. Note: When opening a store in some of the popular shopping centers, including The Dubai Mall, Mall of Emirates and Deira City Center, for example, then it should be taken into account that the sale and the rental price will be much higher in comparison to the costs mentioned above. In addition, it is much more difficult to rent a retail space here, since these units are in high demand and they are booked well in advance. The cost of renting or buying strongly depends on how prestigious the location is and the size of ​​the property. Moreover, in Dubai, not only large shopping malls are popular, but also shopping places in markets with clothing, jewelry, food, souvenirs and more.

Warehouses

Acquiring a warehouse is an excellent investment, which can generate a high annual income. These units have become increasingly popular during the COVID-19 pandemic due to the fact that various companies specialized in e-commerce business have become market leaders. A large number of trading and manufacturing businesses require an affordable warehouse space, so when buying or renting, it is worth paying attention to how far central highways, ports and airports are from the property. The most popular areas for purchasing a warehouse are Jebel Ali, Dubai Investment Park, Al Quoz, Dubai Industrial Park, Technology Park, Al Qusais and Al Warsan. In these locations you can buy a warehouse with an area of ​​1,270 to 395,443 sq.ft at a minimum price of AED 1,400,000 (USD 381,200). As for rentals, in addition to the listed areas, Ras Al Khor and Technology Park are also in high demand. The rental cost in these districts starts from AED 22,800 (USD 6,200) per year.

Showrooms

Showrooms are great for the presentation of any kind of product, including building materials, heavy equipment, or the latest electronic devices. As a general rule, these units offer an area of ​​3,659 to 49,438 sq.ft, which allows you to choose the most suitable space for your product or service. Showrooms located in the FEZ are aimed at corporate clients and are more suitable for interacting with customers. To purchase a showroom, you can look at areas like Ras Al Khor, Al Barsha, Business Bay and Al Quoz. The selling price of these units starts from AED 9,000,000 (USD 2,451,000), while the annual rental price amounts to a minimum of AED 99,000 (USD 27,000).

Commercial Units

Commercial units are in demand among Dubai investors and are especially well suited for independent small businesses like gyms or spas. They can be found in mixed-use complexes, residential communities and business centers. In the commercial real estate market in Dubai, the units are available as compact areas and full-floor units. For example, a full floor will cost at least AED 3,200,000 (USD 872,000), with rent starting from AED 242,000 (USD 66,000) per year. There are commercial properties available for purchase all over Dubai. To acquire a full-floor unit, it is worth considering locations such as Business Bay, Jumeirah Lake Towers, Downtown Dubai, Dubai Sports City, DIFC, Dubai Marina or Jumeirah Village Circle.

Commercial Villas

Commercial villas are on offer in 3-7 bedroom configurations and can be used for both offices and shops. In addition, it is possible to open a kindergarten, a clinic, restaurant or a showroom amongst many more. Commercial villas frequently feature parking, kitchens, swimming pools, lounges or private gardens on site. The best areas to acquire commercial villas are Umm Suqeim, Mohammed Bin Rashid City, Jumeirah, Deira, Al Wasl and Al Safa. The selling price for this type of property starts at AED 2,100,000 (USD 572,000). Meanwhile, these properties can also be rented for a minimum of AED 200,000 (USD 55,000).

Commercial Buildings

Commercial buildings are a great option for both buying and investing. These facilities are aimed at accommodating hotels, multifunctional centers, fitness clubs, spas, business centers, offices, shopping malls and other establishments. There are a large number of buildings available in the areas of Deira, the Sheikh Zayed Road, Dubai Hills Estate, Al Barsha, Jebel Ali, Dubai Production City (IMPZ) and Barsha Heights (TECOM). The minimum purchase price is AED 3,000,000 (USD 817,000), and rental costs start from AED 220,000 (USD 60,000) per year.

Commercial Land

These types of plots are used for many different purposes, such as the construction of commercial properties, which means they are suitable for both personal purposes and investment. There are 2 types of commercial land in Dubai: for mixed-use and for industrial use. For mixed-use land the top deals can be found in Jumeirah Village Circle, Business Bay and Al Jadaf, and are all suitable for the construction of any residential or commercial facility. For the construction of factories, labour camps and warehouses, industrial land is used. It is worth taking into account the areas of Al Quoz, Al Warsan and Jebel Ali Freezone to do this. The cost of a land plot depends on its purpose and starts from AED 1,000,000 (USD 272,500), and the annual rental price amounts to at least AED 60,000 (USD 16,500).

Factories

Dubai is the largest manufacturing center in the country. Industries, such as metallurgy, mechanical engineering, pulp and paper industry, perfumery and cosmetic products, among other industries, are all well developed here. Manufacturing development is one of the most important goals for the prosperity of Dubai. For those investing in the city’s industrial activities, the state provides reduced customs and tax fees, along with other benefits. Most of the factories and plants are situated in Dubai Investment Park, Dubai Industrial Park and Al Qusais. These units are available to purchase for a minimum of AED 800,000 (USD 218,000), while the rental price starts from AED 1,250,000 (USD 340,500) per year.

Labour Camp

Labour camps can also act as commercial properties and are popular to sell and to rent in Dubai. These units represent a cost-effective solution for businesses looking for well-established staff housing. Areas, where these properties are available, include Al Quoz, Dubai Investment Park, Jebel Ali and Muhaisnah. The purchase price for a fully-fledged complex starts from AED 4,500,000 (USD 1,225,000), but the annual rent can be set rather low, at a minimum of AED 5,500 (USD 1,500).

Summary

<ol><li>There are numerous commercial real estate offers in Dubai. Depending on your preferences and purposes, you can purchase offices, retail, industrial units or mixed-use facilities.</li><li>Commercial properties are sometimes district-specific, such as warehouses and various industrial buildings, while offices and retail properties can be purchased in practically all areas of Dubai.</li><li>In the emirate, the most popular commercial property options with investors and tenants are warehouses and coworking spaces.</li><li>When investing in commercial real estate, factors such as supply and demand in the market, return on investment (ROI), real estate liquidity and a stable rental income should be borne in mind in the first place.</li></ol>