Realty estate buyers and investors are willing to pay a good price for good or quality commercial buildings in UAE, but according to Jones Lang LaSalle, a property consultancy firm, they can’t look for “realistically” priced Class A buildings. The director of the Jones Lang LaSalle’s Middle East office, Jesse Downs said, cash are available and investor interest are strong but transactions for commercial buildings are too slow.
In line with commercial properties, according to a report, about 40 percent of buildings in Dubai are empty and values fall by over 60 percent — but the city has not stop building.
According to a data recorded by Real Capital Analytics, about 67 commercial sales happened last year, but 63 of those transactions were for developable land sites, not commercial buildings. In 2008, there were about 680 property sales worth Dh36.7M or more than US$10 million, recorded in UAE.
Jones Lang LaSalle said that the number of sales for this year, 2011, would remain unresponsive due to the shortage of high-and-investment-grade commercial buildings offered in the market for a realistic price.
And, majority of commercial buildings owners in Dubai only signed short-term leasing transaction with tenants, which makes it all the more harder for buyers and investors to commit.
According to Downs, “the yields do not validate the risk-reward equation”, while most investors play safe and mostly buys and invest on commercial properties in United Kingdom and the United States.
But the demand for commercial buildings is increasing UAE, which offers the newest properties compared to any real estate market in the world.