Australia’s commercial-property market has cooled in 2025, but Dubai’s Grade-A offices, retail strips and logistics parks still trade at yields Australian landlords have not seen since the mining boom. Is the difference sustainable? Below is a data-driven look at risk-adjusted returns, regulatory factors and practical lessons for Australians considering a Dubai commercial play.
1. Yield vs Growth: The Numbers in 2025
| Asset Type | Prime Net Yield Dubai (Q2 2025) | Prime Net Yield Sydney CBD | 5-Year Capital-Value CAGR Dubai | Vacancy (Q2 2025) |
|---|---|---|---|---|
| Grade-A Office | 7.3 % | 5.0 % | 6.1 % | 11 % |
| Street-Front Retail (Tourism Nodes) | 8.4 % | 5.4 % | 5.6 % | 6 % |
| Logistics/Warehouse (JAFZA, DIP) | 9.1 % | 5.8 % | 7.8 % | 4 % |
| Flex/Co-Working Floors | 10.2 % | 6.5 % | 4.8 % | 15 % |
Source: CBRE Dubai Marketview Q2 2025; JLL Sydney Snapshot Q2 2025.
Key observations for investors chasing commercial property ROI Dubai:
- Typical net yields outstrip Australian equivalents by 200–320 bps.
- Vacancy remains elevated in offices post-pandemic but tourism-driven retail and logistics sub-sectors show tight absorption.
- Capital growth has been lumpy but positive due to land scarcity around major logistics corridors and the Expo City build-out.
2. Macro Catalysts Fueling Demand
- Population surge – Dubai’s population passed 3.7 million in April 2025 (Dubai Statistics Centre), on track for 5.8 million by 2040. Migrant-driven white-collar hiring underpins office absorption.
- Trade and re-export boom – Jebel Ali port throughput grew 6.9 % YoY, keeping industrial rents firm despite global freight softness.
- REGULATORY SWEETENERS – 100 % foreign ownership in most sectors, renewable 10-year Golden Visas for AUD 840 k (AED 2 m) property investors and 0 % withholding tax on rent remittances give Australian landlords cleaner cash-out than UK or US assets.
- AUD-AED Rate – AUD strength (1 AUD ≈ 2.46 AED in Sept 2025) discounts entry pricing in Australian dollar terms by roughly 8 % versus 2023.
3. Risks Australians Tend to Underestimate
- Service-charge inflation – CAM and cooling fees can top 18 % of gross rent for older buildings; budget conservatively.
- Lease-law asymmetry – The UAE’s commercial Ejari system offers landlords strong eviction rights but renewal caps can still apply in some free zones; get bilingual legal review.
- Currency mismatch – Rental income is AED-pegged to USD. Use forward contracts or AED mortgages to hedge AUD exposure (see Dubaiinvest’s FX desk).
- Empty-shell office fit-outs – Tenants often demand landlord contributions; factor 1,300–1,700 AED/m² for turnkey Cat A.
4. Lessons from Real Australian Investors
| Investor | Asset | Entry Price | Gross Yield Target | Outcome 12 Months | Key Takeaway |
|---|---|---|---|---|---|
| Brisbane Family Trust | 550 m² warehouse in JAFZA | AED 5.6 m | 9 % | 9.4 % net yield, tenant secured in 5 weeks | Industrial demand > supply near ports. |
| Sydney Accounting Firm | 240 m² strata office in Business Bay | AED 4.3 m | 7 % | 6.5 % after incentives | Incentive packages eat margin; negotiate shorter rent-free. |
| Perth Physician | Two retail pods in Dubai Marina walkway | AED 7.1 m | 8 % | 7.8 %, 15 % cap-gain on resale to REIT | Tourist hotspots support dual play: rent + appreciation. |
5. Structuring and Tax for Australians
- Vehicle: Most opt for a DIFC SPV or Free-Zone LLC to shield liability and ease exit; set-up cost ≈ AUD 9–14 k all-in.
- UAE Tax: 0 % corporate tax on qualifying free-zone income until 2071 if substance tests met; otherwise 9 % over AED 375 k profit.
- Australian Tax: Rent is assessable; use FITO for any UAE tax paid. Consider thin-capitalisation limits when using AED debt.
- Repatriation: No UAE withholding. Use multi-currency accounts to batch FX when AUD is favourable.
6. Strategic Entry Plays for 2025–26
- Expo City Mixed-Use – Pre-leased commercial podiums priced at 13,000 AED/m² with 10-year master leasebacks to blue-chip operators.
- Cold-Storage Warehouses – Demand from agri-tech and fast-grocery fulfilment; yields 9 %+, 5-year triple-net.
- Medical Suites in Healthcare City 2 – Ageing expat base drives demand; 8 % net, strong tenant covenant.
7. Commercial Property ROI Dubai: Sensitivity Snapshot
| Variable | Base Case | +1 ppt Vacancy | +10 % Service Charges | AUD-AED +5 % |
|---|---|---|---|---|
| Net Yield | 8.0 % | 7.2 % | 7.5 % | 8.4 % (FX gain) |
Even with softening occupancy, Dubai stays above typical Australian returns, but rising OPEX erodes margin faster than FX swings help.
FAQ
Is commercial real estate a good investment compared with Dubai residential? Commercial yields are 150–250 bps higher but turnover risks and fit-out costs rise too. Diversify across both.
Can I get non-resident bank finance? Yes. Emirates NBD and Mashreq lend up to 60 % LTV for Australians on commercial titles; rates floating at EIBOR + 3.5 %.
Do I need to visit Dubai? Not for conveyancing. Via Dubaiinvest’s Remote Investment Pack you can execute SPA and trustee transfer with a Dubai-based Power of Attorney.
Ready to Compare Live Deals?
Dubaiinvest maintains an off-market mandate list of warehouse, retail and strata-office assets vetted for Australian tax compliance. Book a 30-minute strategy call and receive a tailored shortlist with projected cashflows and FX hedging options.
