Dubai's prime office rental market outperformance is an indicator of economic health

The emirate's real estate sector is set to benefit from government spending for Expo2020

The buyer has been waiting 36 months for the delivery of his off-plan unit. Sarah Dea / The National

Dubai’s commercial property rental market is expected to improve in the second half of the year, according to a new report by consultancy Knight Frank, an indication that the emirate's real estate sector is getting back on its own two feet.

The improvement is expected to be located in prime locations such as the Dubai International Financial Centre, where vacancy levels remained at a low of 1 per cent in the second quarter.

The DIFC in particular benefits from its status as a financial freezone and a location with good infrastructure, which are major attractions to companies. Already the freezone is planning to expand its space through the Dh1 billion Gate Avenue due to open next year, and the Dh180 million Exchange Building,

Any uptick in the office market is good news for the emirate's property sector and the economy overall, and already there are signs that that the overall real estate market is making a comeback.

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Dubai's real estate sector has perked up in the first half of this year, with deals transacted rising 16.8 per cent in value compared with the same period in 2016, the Dubai Land Department said in July. The total value of real estate transactions meanwhile reached Dh132 billion in the first half compared with Dh113bn last year.
Dubai Marina was the top pick in terms of number of transactions, followed by Business Bay, Al Barsha South 4 and Jebel Ali. In terms of value, Palm Jumeirah took the lead, followed by Business Bay, Burj Khalifa and Dubai Marina.

Dubai's property market has suffered from lower prices in the past years due to the economic slowdown gripping the country and the strong US dollar to which the dirham is pegged to, making investments in the sector pricey to buyers.

But the expected improvement in the emirate’s growth forecasts in 2018 and the recent depreciation of the dollar are likely to help lift the performance of the real estate sector, which remains a barometer for the health of the economy.

With Expo 2020 around the corner, the property market is expected to flourish as the slew of projects pick up pace.

The government’s intensive investment spending on infrastructure projects in the lead-up to the event will also prop up economic growth, which can only lead to a more robust property market.