Highest and Best Use Analysis: Unlocking Hidden Value in Underutilised Assets
Many property assets in the UAE are underutilised or not operating at their full potential. The UAE has significant latent value within its real estate market. While no single figure captures the scale of unrealised value, opportunities often lie in assets whose highest and best use has yet to be identified through strategic analysis. For many property owners, unlocking this value begins with understanding what an asset could become, rather than what it is today.
Alternative Uses for Underutilised Assets
There are many reasons why certain assets may become underutilised, from changing market conditions and shifting demand to broader economic and regional factors. In the Middle East, these challenges have also been shaped by broader regional and economic shifts. However, there are several alternative routes available, including adaptive reuse into cultural and creative spaces. This includes repurposing old or abandoned buildings into thriving cultural districts. Other examples include educational use and university campuses, particularly in established and emerging districts.
Vertical farming and urban agriculture, which is the practice of growing crops in vertically stacked layers inside controlled indoor environments, often without soil, is another alternative use.
Other examples of adaptive reuse include co-living and affordable housing. Repurposing office buildings and abandoned commercial properties into residential units is an innovative solution to the growing demand for affordable housing, especially in the UAE, where there are ongoing initiatives supporting more competitive apartment supply.
Innovation hubs and co-working spaces are also becoming more common due to changes in work dynamics post-pandemic and a decline in traditional office demand.
Other alternatives include hospitality and boutique hotels, heritage and cultural preservation, and mixed-use redevelopment. The range of approaches is extensive; all aimed at unlocking greater value through more effective utilisation.
This also carries sustainability benefits, supporting more efficient use of existing built assets rather than new development.
Examples of Transformed Asset Performance
A notable example is Alserkal Avenue, which has evolved from an industrial warehouse district in Al Quoz into a thriving cultural destination featuring galleries, retail concepts, cafés and entertainment spaces.
Other examples of transformed asset performance include Dubai Knowledge Park, where existing office space has been successfully adapted to support education-focused uses. In Abu Dhabi, the MiZa district was repurposed into a campus for a non-profit tuition fee initiative.
Mixed-use redevelopment continues to demonstrate strong potential, with the integration of residential, retail, leisure and office components often enhancing overall asset performance and long-term value creation.
What Are the Best Practices?
Successful highest and best use analysis begins with a detailed feasibility study to assess whether repositioning is practical, commercially viable and aligned with local planning requirements.
It is also important to conduct a full structural and technical audit, starting with a Phase One structural survey, followed by Phase Two involving destructive testing such as core samples and reinforcement checks.
Another crucial step is navigating regulations early, especially if older buildings need updated systems and technology to meet present standards. The design of the development or upgrade is also important, including smart space planning and tech integration to ensure assets meet modern operational standards.
Financial planning, phased execution and clearly defined post-completion asset management strategies are equally important to maximise long-term returns.
Ultimately, the right approach depends on the asset itself, its location and prevailing market conditions. With the right methodology, underutilised assets can be repositioned to unlock materially greater value and long-term performance.
Want to understand your asset’s potential? Contact Cavendish Maxwell’s Strategy and Consulting team to discuss a tailored approach for your property
