Analysts at leading real estate services and investment firms predict that the UAE real estate market will have another stellar year in 2023, with performance and activity levels reaching multi-year record highs in many sectors.
The UAE Real Estate Market Review Q4 2023 from CBRE states that performance was driven by consistent activity levels in the real estate market throughout the final quarter of 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.
Dubai’s average residential prices increased by 20.1% in the year that ended in December 2023; prices for apartments and villas increased by 19.8% and 21.8%, respectively. While average villa prices in Abu Dhabi barely changed from the same period the previous year, average apartment prices increased by 1.1% in the residential sector during that time.
“The macroeconomic sentiments for the UAE remain favorable. 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.
Savills reports that 2023 saw a surge in demand for office real estate in Dubai, with some developments experiencing annual rental increases of over 40%. At the same time, the number of residential transactions increased by 29% annually to reach a record-breaking 118,200 units.
The rental market in Abu Dhabi slowed, according to the CBRE report, with a 12.6% year-over-year drop in the total number of registrations in the last quarter of 2023. The primary reasons for this decline were a 2.2% decrease in newly registered contracts and an 18.4% decrease in renewed rental registrations. Despite the slowdown in activity, the average apartment rent increased by 2.0 percent per year to Dh64,996.
Over the same period, villa rents also saw a slight increase of 0.8 percent, 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 percent expected to be delivered in Yas Island and Al Maryah Island,” said the report.
Villa rentals increased by 0.8 percent on average during the same time period, to Dh163,098. According to the report, 4,438 new residential units are anticipated to be finished in the upcoming year, with Yas Island and Al Maryah Island accounting for 69.1% of the total.
Villa rentals increased by 0.8 percent on average during the same time period, to Dh163,098. According to the report, 4,438 new residential units are anticipated to be finished in the upcoming year, with Yas Island and Al Maryah Island accounting for 69.1% of the total.
After growing by 19.2% in November 2023, the average residential rent in Dubai grew by 18.9% in the year that ended in December 2023. Over the course of the year, Dubai’s rental market saw a consistent slowdown in growth. By 2023, 39,190 residential units are expected to be delivered overall, with Meydan One, Downtown Dubai, and Business Bay contributing 34.4% of the estimated completion of this new stock. 2024 is expected to see the delivery of 68,880 more units, with Damac Lagoons, Business Bay, and District Seven accounting for 22.7% of those deliveries.
In the hospitality sector, 4.94 million people stayed in hotels in Abu Dhabi in 2023—a 29.0% increase from the year before and a 9.9% increase from pre-pandemic levels. Similarly, Dubai had 17.15 million foreign visitors in 2023 compared to 19.4% in 2022.
The fourth quarter of 2023 saw a slowdown in leasing activity in Abu Dhabi’s retail sector; 6,913 rental contracts were registered, a 6.5% decline from the same period in 2022. A 3.4% decrease in newly registered contracts and a 7.9% decline in renewals were the main contributors to the decline. During the same period, the total number of rental registrations in Dubai’s retail market rose to 17,894, a 0.7% increase. However, within this, new registrations decreased by 7.7% while renewals rose by 5.6%.
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