Commercial property occupancy rates vs new malls sprout in Dubai

04.06.2017

DIP free zone registered 280 new entities, while 900,000 sq m of retail space to soon be constructed in Dubai.

While large free zones and Dubai industrial areas such as Dubai Investments Park (DIP) attract more and more occupants, commercial property sector’s supply is growing in different parts of Dubai, putting pressure on rentals.

From January to April 2017, Dubai Investments Park grew with new 280 sub-tenants having leased premises there. These are operational companies representing various industry branches from medium to light (pharmaceutical, oil and gas, construction, etc.), which have rented 218 warehouses, 38 offices and 23 retail units in DIP during the mentioned period of time. Thus, the total number of companies operating in DIP has now reached 4,880 units.

Such a surge of interest in DIP among industrial tenants is explained by its favorable strategic location near the Expo 2020 site and Dubai South, as well as a convenient infrastructure having been developed here for business and for life.

Meanwhile, tenants of retail units, whose interests are not tied to a particular area, will, on the contrary, soon get a bunch of ​​new opportunities, including reduced rents for premises in malls, for about 900,000 square meters of new shopping and entertainment centers is now being delivered in different areas of Dubai. It is expected that 54% of new retail spaces will be located in super-regional malls with 800,000 square feet or more of gross leasable area.

The above substantial number of new retail premises will enter Dubai real estate market in the next two to three years, according to Knight Frank. This means that store tenants will look for novelty and better quality when choosing a lease, which means that old malls will have to revise rentals, although, so far rental prices in this segment of the Dubai real estate market have been kept stable, without sudden fluctuations.

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