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Recovery and growth for GCC real estate

28 June 2023

 

The GCC’s real estate market is undergoing a resurgence, having overcome the persistent slump triggered by the 2014 oil price drop and the short, sharp shock of the Covid-19 pandemic. 

Saudi Arabia’s real estate landscape is characterised by dichotomy, with the office sector thriving even as the residential market faces challenges. In Riyadh, the office sector has experienced a surge in demand, with record occupancy levels, primarily for grade A spaces. Meanwhile, the residential sector is grappling with affordability issues, causing a significant reduction in residential property transactions.

In the UAE, the real estate sector started 2023 on a high note, demonstrating increased activity across all market segments. The office sector, particularly in Abu Dhabi and Dubai, witnessed a rise in rental performance and occupancy rates. The residential market in Abu Dhabi is demonstrating moderate growth and Dubai’s property prices have increased by 12.8 per cent within a year. Despite varied leasing activities in the retail sector in Abu Dhabi and Dubai, the hospitality industry signals positive improvement with increased international visitor arrivals.

Meanwhile, in Qatar, following a bustling 2022 thanks to the Fifa World Cup, the real estate market is realigning, with patterns akin to 2020 and 2021. A decline in apartment rentals contrasts with the buoyant villa market, which is maintaining high occupancy rates and stable rents. Residential sales transactions have dipped significantly, however, and leasing activities within the office segment have also been relatively muted in the first quarter of 2023.

In Bahrain, the sector is sustaining its growth trajectory. The villa market is thriving, with capital values in the mid-range segment experiencing a year-on-year increase of 5.2 per cent. Although the apartment rental market is facing a supply-demand imbalance, the demand for office spaces remains strong.

Kuwait’s real estate market is experiencing a downturn, primarily due to escalated valuations and borrowing costs, coupled with uncertainties over housing reforms. This decline extends to residential and commercial sector sales, and the investment sector mirrors the downward trend.

Oman’s market is proving resilient, with an increase of 17.4 per cent in real estate trading compared to the same period in 2022. Factors such as the easing of global travel restrictions and the economic rebound post-Covid have stimulated demand for residential and commercial properties.

Despite the varied landscape, GCC real estate shows promising signs of recovery and growth, offering a dynamic investment landscape. As the sector continues to evolve and adapt, new possibilities will open up for investors and developers.

Main image: Dubai’s property prices have increased by 12.8 per cent within a year

Read more on the GCC real estate markets

 

 

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Colin Foreman

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