According to a recent report released on Wednesday, prime residential real estate in the United Arab Emirates is predicted to yield between 6.25 and 7 percent.
Residential properties are predicted to yield between 7% and 7.5%, per CBRE Research’s 2024 Market Outlook for Middle East real estate.
Within the office sector, the range of expected yields for prime offices is 6.5% to 7.25 percent, and for grade A offices it is 7.5% to 7.5 percent.
According to the report, there are $409 billion worth of real estate projects planned or under construction in the United Arab Emirates, which makes up 24.4% of all the projects in the Gulf Cooperation Council region.
In the residential market, the UAE continues to be the only market that has recorded both price and transaction volume growth in 2023, the report noted. “In Abu Dhabi, we expect that transaction volumes will continue to grow over the course of 2024, with new high-end and prime stock expected to underpin stronger rates of price growth on average. Existing and dated stock, on the other hand, is likely to materially underperform the market,” the report said.
In Dubai, CBRE expects transaction volumes to decrease marginally. “Price growth in the apartment and villas segments of the market will continue. However, we expect this rate to moderate somewhat over the course of the year,” the report said.
In the office space category, CBRE sees occupier activity in the UAE is likely to remain resolute in the year. “We forecast that Prime and Grade A assets will continue to outperform the market, given the scarcity in supply and rising demand for high-quality assets. In Dubai, with the lack of existing quality stock, elevated demand levels, and the limited number of developments in the pipeline, which are seeing strong pre-leasing activity, we expect that rental rates will continue their upward trajectory moving forward, however at a slower rate than the year prior,” CBRE said in its report.
In retail, average rents increased in Abu Dhabi and Dubai by 10.7% and 17.6%, respectively last year. “Looking ahead, we expect that the levels of demand in both Abu Dhabi and Dubai will remain strong. However, the lack of quality stock, particularly in Dubai, remains the most significant concern. Given this, we expect that new rental registrations will continue to edge down, although total demand will remain net positive. Rental rates are expected to continue to increase, however, we do expect that the rate of rental growth will moderate in both Abu Dhabi and Dubai,” the report said.