(MENAFN- Khaleej Times) The UAE's real estate market is on track to record another stellar year after performance and activity levels reaching multi-year record highs in many sectors in 2023, analysts at leading real estate services and investment firms said.
Activity levels within the UAE's real estate market remained solid over the last quarter of 2023, and this continues to drive performance, CBRE said in its UAE Real estate Market Review Q4 2023.
“The UAE's real estate market concluded another stellar year, with performance and activity levels reaching multi-year, if not historic, record highs in many sectors. Attention will now turn to the outlook for 2024, where, albeit reduced, but still material global economic headwinds are underlining concerns as to what extent these levels of performance could continue. Even with potential global economic downside risk, we anticipate that both performance and activity levels will be resilient over the course of this year, albeit with growth rates expected to moderate in a number of sectors,” said Taimur Khan, head of Research – Mena at CBRE in Dubai.
In Dubai, average residential prices increased by 20.1 per cent in the year to December 2023, with apartment and villa prices rising by 19.8 per cent and 21.8 per cent, respectively. In Abu Dhabi, the residential sector saw average apartment prices increasing by 1.1 per cent in the same period, whereas average villa prices remained almost unchanged from the comparable period a year earlier.
“The macroeconomic sentiments for the UAE remain favourable. The non-oil sectors have seen significant expansion over the past two years, remain healthy, and are well positioned to grow over the next 12 months, which will benefit the real estate sector. However, there may be risks of oversupply for select assets across a few locations, which may limit any significant increase in average prices going forward,” said Swapnil Pillai, associate director of Research at Savills Middle East.
In Dubai, residential transaction activity grew by 29 per cent y-o-y to an all-time high of 118,200 units while the office real estate market witnessed a surge in demand in 2023, with some developments seeing yearly rental increases of more than 40 per cent, according to Savills.
The CBRE report noted that the rental activity in Abu Dhabi experienced a slowdown, with the total number of registrations in the last quarter of 2023 decreasing by 12.6 per cent year-on-year. This decline was driven by an 18.4 per cent drop in renewed rental registrations and a 2.2 per cent decrease in new contracts registered. Despite the slowdown in activity, average apartment rents still managed to rise by 2.0 per cent year-on-year, reaching Dh64,996.
Over the same period, villa rents also saw a slight increase of 0.8 per cent, reaching an average of Dh163,098.“Looking ahead, approximately 4,438 new residential units are expected to be completed in the coming year, with 69.1 per cent expected to be delivered in Yas Island and Al Maryah Island,” said the report.
In Dubai, the rental market had a continued moderation in the rate of growth throughout the year, where average residential rents rose by 18.9 per cent in the year to December 2023, down from the 19.2 per cent growth registered in November 2023. In 2023, a total of 39,190 residential units expected to have been delivered, with 34.4 per cent of this new stock estimated to have been completed in Meydan One, Downtown Dubai, and Business Bay. A further 68,880 units are expected to be handed over in 2024, with 22.7 per cent scheduled for delivery in Business Bay, District Seven, and Damac Lagoons.
In the hospitality sector, the total number of hotel visitors in Abu Dhabi reached 4.94 million in 2023, marking a 29.0 per cent year-on-year increase and a 9.9 per cent increase from the pre-pandemic levels. Similarly, in 2023, Dubai saw a 19.4 per cent rise in international visitors compared to 2022, bringing the total to 17.15 million.
Abu Dhabi's retail sector saw leasing activity slowing down in the last quarter of 2023, with the number of rental contracts registered dropping by 6.5 per cent compared to the same period in 2022 to reach 6,913. This decline was driven by a 3.4 per cent decrease in new contracts registered and a 7.9 per cent drop in renewals. Over the same period, Dubai's retail market saw a marginal 0.7 per cent increase in total rental registrations, reaching 17,894. However, within this, new registrations declined by 7.7 per cent, while renewals grew by 5.6 per cent.
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