Tips on giving commercial space a facelift

Tips on giving commercial space a faceliftImage Credit: Supplied

Dubai's realty industry is witnessing a phenomenal demand for commercial refurbishments including office buildings, malls, hotels and more. In fact, developers and owners are initiating this actively, hoping that it would generate good profits.

For instance, hotels in Dubai operate on 90 per cent year-round occupancy; thus, the life expectancy of its facilities and amenities is generally short. They require refurbishment to optimise their value, enhance their brand and sustain their market position.

Similar to the hospitality sector, office and mall renovation is also rising. In fact, a major Dubai-based developer shifted to a completely remodeled office space near Jebel Ali.

Refurbishment enhances the income of older buildings in any location and attracts investors who can take advantage of the fast-changing rental growth cycles. In addition, remodeling over new builds consists of lesser cost, shorter development period and better tenant business, among others. However, the rise in rental income following refurbishment is typically based on full occupancy.

Commercial businesses could do major or minor refurbishments. The goal of a major refurbishment is to extend the life of the asset by 15 to 20 years. This could include structural changes, increasing space area, up-grading all areas and changing the exteriors. Typically, time for such work could take 18 to 24 months. On the other hand, minor refurbishments provide an economic life to the asset by five to eight years. Work includes upgrading the lobby, lifts, common areas, toilets and landscaping which could take six to eight months. The cost varies depending on whether existing resources would be used. Generally, clients are advised to allot a year's rent for their office refurbishment budget.

Different locations present distinctive dynamics. Thus, refurbishment strategies need to be customised accordingly to maximise returns. Along with strategy, timing is also crucial.

Handy Hints:

• There is high demand for commercial refurbishments in Dubai

• Hotels, malls and offices undergo either major or minor facelift

• Upgrade strategies depend on location and its distinct dynamics

Check out the commercial property buying guide

Source: Arva Shikari, Special to Properties

The writer is a freelancer


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