Recovery and growth for GCC real estate

The UAE’s real estate market started 2023 on a robust note, showing increased activity levels across all sectors during the first quarter, according to the latest report from property consultant CBRE.

Taimur Khan, head of research – Middle East and North Africa at CBRE in Dubai, said: “The UAE’s real estate market has sustained strong levels of demand during the first quarter of 2023, which has continued to support performance across all sectors.

“While a moderation in growth rates is expected going forwards, the market is predicted to continue its performance trajectory throughout the year. Any potential slowdown will likely be driven by a shortage of supply, primarily in the industrial, office and prime retail sectors.”

The report shows an upward trend in rental performance in Abu Dhabi’s office sector. Average prime, grade A and grade B rents rose by 19.1 per cent, 8.8 per cent and 10.7 per cent, respectively, year-on-year to the first quarter of 2023.

In Dubai, the number of new Ejari registrations in the first quarter totalled 22,802, an increase of 60.5 per cent from the previous year. This rise, alongside a limited availability of supply, has improved occupancy within Dubai’s office market from 80.6 per cent in the first quarter of 2022 to 91.2 per cent in the first quarter of 2023.

Free zone areas have seen consistent occupier activity and are predicted to continue to do so, especially considering the recent introduction of 9 per cent federal corporate tax, where free zones are anticipated to hold certain benefits.

In the residential sector, average apartment and villa prices in Abu Dhabi have increased by 1.4 per cent and 1.6 per cent, respectively, in the year to March 2023. 

Conversely, average apartment rents have declined by 0.7 per cent, while villa rents have grown by 1.1 per cent. Significantly, 2,194 residential transactions were recorded in Abu Dhabi in the first quarter, marking a year-on-year increase of 72.2 per cent.

In Dubai, average property prices have risen by 12.8 per cent in the year to March 2023. Even though apartment sales rates are 17.1 per cent below the late 2014 highs, several communities have surpassed their 2014 levels. Villa sales rates have already exceeded the record highs of 2014 by 0.7 per cent.

The hospitality sector has also noted improvement. The number of international visitors to Dubai totalled 4.7 million in the year to March 2023, up by 17.6 per cent from a year earlier, although still 1.7 per cent below the same period in 2019.

In the retail sector, leasing activity has remained consistent. In Abu Dhabi, 8,028 rental contracts were registered in the first quarter of 2023, marking a year-on-year increase of 6.5 per cent. Dubai witnessed a slight decrease of 0.9 per cent in retail registrations, amounting to a total of 23,094.

Finally, the UAE’s industrial and logistics sector also recorded reliable leasing activity, particularly in the automotive, e-commerce, consumer goods, manufacturing and small and medium-sized enterprise sectors. As a result, average rents in Abu Dhabi and Dubai increased by 5.9 per cent and 16.2 per cent, respectively, in the year to the first quarter of 2023.