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There was a time when Business Bay was considered Downtown Dubai's poor cousin. That is no longer the case. Even though the waterside commercial and residential destination is still under development, a lot has happened since work on many projects resumed following Dubai's economic rebound and renewed investor interest in the emirate's property market.
The cranes and bulldozers are humming back to life as the government begins to put into action its plans to revitalize this locality and reinvent it as a major tourist attraction.
Gregory Lewis, Senior Negotiator at Knight Frank, tells Property Weekly development in the area has been slow over time with the financial downturn taking its toll on the property market, leaving several unfinished projects.
''However, with prices soaring in Dubai. Business Bay is now firmly on the map as a great alternative for investors and end users who can't afford the premiums in Downtown Dubai,'' says Lewis. ''The recent start of the Dubai Water Canal project has added an exceptional boost to the area, with some towers recommencing work and plans for further residences and hotels released.''
Craig Plumb, Head of Research - Middle East and North Africa at JLL, explains in a report that the return of construction activity in Business Bay over the past 24 months is led by increased investor interest in the residential and hospitality sectors. He says this trend has reshaped the nature of Business Bay, which was initially planned to predominantly provide office space.
Recently, some buildings that were initially designed for offices have been converted to residential property. Noting the renewed zeal in development and architecture, Plumb says there are new schemes in the area that could rival those in Downtown Dubai.
Dubai's Department of Economic Development has reported that new business licences issued last year had risen by 11.4 per cent year on-year to more than 18,000, with the strongest growth seen in the professional services category.
Consistent with this, the rental values in locations such as Emaar Square, Tecom and Business Bay have seen double-digit increases over the past year, which has led to increasing yields for owners in these areas.
With new businesses being set up in Business Bay, the rents have already seen an escalation.
''In the first quarter, the professional sector accounted for 39 per cent of the total demand for office space in Dubai,'' says Khawar Khan, Research Manager at Knight Frank. ''Both inquiries and leasing transactions within well-specified buildings in the Business Bay area have remained fairly healthy over the past quarter. What's more, with Regal and Prism Towers now at near full occupancy, and limited space available in Vision Tower, rents for good buildings in decent locations have risen by around 10 per cent over the past year.
''However, the delivery of new developments in Business Bay, such as Bay Square, Bay Gate, The Burlington and Prime Tower, should cause rental values to more or less flatten out over the next 12-18 months.''
Concerns about traffic snarls and poor road condition are worrying daily commuters on Shaikh Zayed Road, especially in the area where the construction of the Dubai Water Canal is in full swing, but those who have invested in real estate in Business Bay will be singing a completely different tune.
The Dubai Canal, which is touted to be a major tourist attraction, will be between 80m and 120m wide. There will be four hotels, 450 restaurants, a new shopping mall, luxury residences and cycling paths along it.
''This development is expected to boost tourism in Dubai with an estimated footfall of 22 million visitors,'' says Haider Ali Khan, CEO of Bayut.com. ''The canal extension will also separate Business Bay from the mainland, effectively turning it into an island and hence increasing property value, presenting investors and land owners with greater yields.
''This project will also increase the value of construction projects currently in progress along Al Meydan Road, which is only a junction away from Shaikh Zayed Road. This could potentially turn the area into a true real estate haven in the coming years.''
Since February there has been a slew of commercial to-residential conversions, new hospitality and tourism projects and other entertainment options announced in Business Bay.
Dubai Properties Group (DPG), Business Bay's master developer, launched the 102,675-sq-ft Bay Avenue Park during the first quarter. The project will be one of the first of its kind in the district and will feature attractions such as two outdoor gyms, two children's playgrounds, a jogging track, an interactive water fountain and a skating park.
The idea of developing a family park in a business-related locality seems strange, but it is all part of the district's transformation into a mixed-use community.
Sahar Al Ansari, Executive Director of Real Estate Management at DPG, hinted at the ongoing transformation during the launch of Bay Avenue Park: ''We are committed to enhancing our destinations and districts for the benefit of residents and visitors by providing additional services and leisure facilities. Bay Avenue Mall was opened two years ago to service the needs of more than 50,000 people in Business Bay.
''Now, with the opening of this park we hope to turn this into a truly unique destination where visitors can relax and enjoy the outdoor space.''
Beginning last month, Dubai Properties, the development company of DPG, commenced handover of its popular mixed-use Bay Square development, which was sold out when it was launched for sale last year.
It comprises 13 low-rise buildings, which include residential, commercial and retail units and a hotel facing a landscaped courtyard.
Accor Hotels Middle East recently signed a management agreement with Indian real estate developer Hiranandani Group. The deal was signed for a 350-room ibis Styles hotel that will be located along the Business Bay canal and is expected to be completed by mid-2016.
Darshan Hiranandani, Managing Director of Hiranandani Group, says the location of the project takes advantage of the growing demand for mid-range hospitality in Dubai. This shows that Business Bay is also riding on the wave of hospitality developments in Dubai, and renowned hotel management companies are planning new projects in the district.
Steve Morgan, CEO of Cluttons Middle East, said in a recent media report that with the shortage of Grade A office supply, centrally located sub-markets such as Business Bay and Downtown Dubai are expected to be highly sought after. Property investors in this emerging community couldn't agree more.
Click on Business Bay and have a glimpse on the Market Trends of this locality which is the top choice for office space in Dubai
Source: Aqsa Shabbir, Special to Property Weekly