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Dubai to retain GCC realty market lead in 2024

Real estate value transacted in Dubai increased almost 57 per cent y-o-y over the 10-month period

Dubai’s real estate sector, which accounted for more than half of the GCC’s transactions worth $171.6 billion in 2023, will continue to dominate the region’s buoyant property market in 2024, realty analysts said.

The region’s real estate supply in most segments could quickly get sensitive to market wide headwinds in 2024, but frontline developers with strong liquidity, particularly in Dubai and Riyadh, should be able to calibrate swiftly to bring the right product types to the market, analysts at Kamco Invest said.

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 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, specialised 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.

According to another leading real estate expert CBRE, the total value of real estate projects planned or underway across the GCC currently stands at $1.36 trillion, of which Saudi Arabia has the lion's share of 64.5 per cent equating to around $877 billion projects followed by UAE with 21.6 per cent share of the total regional projects.

In the first 10 months of 2023, real estate sale transactions in the GCC reached $171.6 billion, up 21.1 per cent year-on-year from $141.7 billion over the same period in 2022. Dubai’s realty transactions contributed 52.1 per cent of the region’s total transacted value. The Dubai market was able to offset the decline of the other key markets such as Saudi, Qatar and Kuwait.

Real estate value transacted in Dubai increased almost 57 per cent y-o-y over the 10-month period, mainly driven by strong pricing for leading developers and off-plan demand of luxury properties and single-family, multi-family homes of above Dh5 million. Transacted value of Abu Dhabi real estate also jumped by 56 per cent over the first none 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 per cent) over the first ten months of 2023 and reached 495,872 deals, despite a jump of over 43 per cent and 36 per cent witnessed in Dubai & Abu Dhabi’s RE transactions,'' Kamco's report said.

The report noted that the average value per transaction achieved over January-October 2023 for GCC real estate was up by 22.1 per cent y-o-y as investors continued to see value for market leading real estate products despite the strong pricing demanded by developers.

In Dubai, off-plan transactions continued their strong momentum with off-plan volumes jumping by over 40 per cent over January-November 2023 when compared to full year 2022 estimates, while registering a healthy 9.8 per cent increase in average off-plan value per transaction from end -2022, analysts said.

According to data from Statista, the value of the GCC real estate sector as a whole is expected to reach $4.43 trillion in 2023 and record a compound annual growth rate of 2.65 per cent through 2028 to achieve a market volume of $5.05 trillion.

The main drivers of this regional boom are Saudi Arabia and the UAE, where the realty sector accounts for around 5.5 per cent of the country’s overall gross domestic product, is recording an unprecedented pace of growth as a key catalyst to the nation’s economic diversification.

In its '2023 Middle East Real Estate Market Outlook', CBRE said price growth in Dubai and Riyadh have significantly outpaced the regional average. In 2022, the UAE was the only market to record price growth and transaction volume growth across all cities and sectors,