According to realty analysts, Dubai’s real estate industry, which accounted for over half of the GCC’s transactions valued at $171.6 billion in 2023, will continue to rule the region’s thriving real estate market in 2024.
According to analysts at Kamco Invest, frontline developers with strong liquidity, especially in Dubai and Riyadh, should be able to quickly calibrate to bring the right product types to the market. However, the region’s real estate supply in most segments could quickly become sensitive to market-wide headwinds in 2024.
Residential developers in Dubai and Riyadh “who possess dominant brand equity, an attractive product mix, and market sensitive payment plans” can achieve sell-through of its new launches in the build-to-sell (BTS) portfolio going forward, Office markets in Dubai and Riyadh are also expected to remain strong as they compete for their market share of regional headquarters (RHQ) and new Grade-A office space supply from developers remains limited”, they said in their GCC Real Estate Update.
“For retail, best-in-class super regional malls and community-linked malls in key markets should witness strength in typical late-cycle trends, as they should continue to achieve higher occupancy rates and should mitigate tenant portfolio risks adequately. In the industrial warehouse market, specialized warehouse spaces will remain in demand and in short supply in 2024, pushing up rents for such spaces and widening the rental gap with lower quality spaces,” Kamco said in its report.
The GCC currently has $1.36 trillion worth of real estate projects planned or underway, with the UAE accounting for 21.6% of these projects and Saudi Arabia holding the lion’s share at 64.5%, or roughly $877 billion. This information comes from CBRE, another renowned real estate expert.
The GCC saw $171.6 billion in real estate sales transactions in the first ten months of 2023, a 21.1 percent increase from $141.7 billion in the same period in 2022. 52.1% of the region’s total transacted value came from real estate transactions in Dubai. The collapse of other significant markets, including Saudi, Qatar, and Kuwait, was somewhat mitigated by the Dubai market.
Throughout the 10 months, Dubai’s real estate transaction value rose by nearly 57% year over year. This increase was primarily caused by leading developers’ aggressive pricing strategies and the off-plan demand for luxury properties and single- and multi-family homes costing more than Dh5 million. The real estate market in Abu Dhabi saw a 56% increase in transaction value in the first three months.
“Both UAE markets pushed the aggregate value transacted in the GCC until October 2023 beyond the full-year estimate for 2022 of $165.8 billion. The number of transactions in the GCC however remained broadly stable y-o-y (-0.8 percent) over the first ten months of 2023 and reached 495,872 deals, despite a jump of over 43 percent and 36 percent witnessed in Dubai & Abu Dhabi’s RE transactions,’‘ Kamco’s report said.
According to the report, despite the high prices demanded by developers, investors continued to see value in the market’s leading real estate products, with the average value per transaction for GCC real estate achieved between January and October 2023 rising by 22.1% year over year.
Off-plan transactions in Dubai maintained their robust momentum, with off-plan volumes rising by more than 40% between January and November 2023 compared to estimates for the entire year 2022. Analysts noted that the average off-plan value per transaction increased by a healthy 9.8% from the end of 2022.
The GCC real estate market is predicted to reach a total value of $4.43 trillion in 2023 and grow at a compound annual growth rate of 2.65% through 2028, reaching a $5.05 trillion market volume, based on data from Statista.
The UAE and Saudi Arabia are the primary forces behind this regional boom; in the former, the real estate industry contributes 5.5% of GDP and is expanding at an unprecedented rate, which is a major factor in the country’s economic diversification.
According to CBRE’s “2023 Middle East Real Estate Market Outlook,” price growth in Dubai and Riyadh has greatly surpassed the average for the region. The UAE was the only market in 2022 to see increases in both prices and transaction volume in all cities and industries.