Business Bay - The growing commercial hub of Dubai

Business Bay growing commercial hub in DubaiImage Credit: Supplied

The region's business capital, Business Bay, as the name suggests, is an upcoming central business district in the heart of Dubai. The project was mainly focused on bringing in more capital and investments to boost the economy, in turn providing investors with a wider range of commercial investment choices and an opportunity to maximize their return on investment (ROI).

Commercial property has always been the mainstream investment for maximum ROI, having several investors from all over the world. Investors in Dubai have started to see the impact a commercial property does on a long-term investment and the demand it has created in the economy.

When it comes to any type of investment, we have to consider three major factors – time, ROI and appreciation of value.

The first will consider the period the property has been under an individual's name. The average time you hold on to a commercial property will fetch you more ROI and appreciation of value than a residential property. The ROI for a commercial property averages between 5% and 7% in the initial two years, and this gradually increases over time for up to 10%; whereas for a residential property, you can only consider a 4% to 5% ROI after deducting the service and maintenance charges.

The past boom graph record shows prices for commercial properties have increased on an average of 30% to 50% within a year, compared to the relatively 10% to 30% increase for residential properties. This shows that the anticipated appreciation of value for commercial properties has a lot of potential over the next few years. Thus, it makes sense to invest in commercial property.

Dubai is still an emerging economy and its property prices are still comparatively lower than the major international markets. With Expo 2020 focused on the emirate, the city is expected to undergo drastic improvements in the coming years, which, in turn, will add to the rise in prices and demand for properties.

Handy Hints:

Business Bay is one of UAE's commercial investment destinations

• Commercial property fetches more ROI than residential property

• Its prices increase at an average of 30% to 50% within a year

Get tips on relocating to a new office building

Source: Rania Nihalani, Special to Properties

The writer is CEO/Managing Director, Victory Venture Real Estate

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