Demand for shops and office space is increasing more in the UAE than anywhere else in the world, although there is still an oversupply in the commercial property market.
A survey by Royal Institute of Chartered Surveyors (RICS) said demand for commercial property in the UAE has risen to its highest level since 2008, ahead of rises in Thailand, Russia and the United States.
The organisation found that 48 per cent more of its UAE members reported that companies were looking to take new shops and offices during the third quarter, compared with those reporting a fall in demand.
The RICS study was based on responses from 942 surveyors around the world. They were asked to gauge current demand in their own markets, compared with the previous quarter.
Despite the surge in demand in the UAE, surveyors reported more empty offices and shops than there were businesses to fill them. A net 57 per cent more RICS members reported an increase in available commercial space during the third quarter, compared with those reporting a fall.
Surveyors said they expect to see commercial rents in the UAE fall. However, sentiment is improving, with fewer of those questioned during the third quarter expecting prices to drop.
The number of buyers hoping to invest in property in the UAE also increased during the quarter. According to RICS members, demand from investors rose the third fastest in the world during the third quarter, behind Canada and Japan, with a net balance of 42 per cent of RICS members reporting an increase.
Members were also optimistic about how the market will perform in the last three months of the year. According to the survey, a net balance of 40 per cent of UAE surveyors said demand would increase further, an improvement from 7 per cent the previous quarter.
A net 22 per cent of surveyors also reported that they expect capital values to increase in the coming quarter – the eighth highest proportion of surveyors anywhere in the world and ranking behind Russia, Brazil, Hong Kong and Canada.
“The improving economic picture in the UAE is likely to be lifting confidence in the domestic real estate market. Indeed, strong growth of key sectors such as tourism, commerce and retail will impact directly on the commercial sphere,” said Simon Rubinsohn, chief economist at RICS.
“The results of the survey are reflected by this, with strong gains in both occupier and investment demand. This turnaround is now shifting expectations for rents and capital values, which are no longer projected to fall. The country also stands to benefit from an influx of regional capital, as the UAE retains its safe haven reputation among investors.”