Middle East Real Estate Market Outlook 2023
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Performance in the GCC’s office market was relatively upbeat over the course of 2022.
In Bahrain, the prime and Grade A markets saw rates fall marginally by 0.4% and remain stable respectively. Despite new developments scheduled to be delivered over the course of 2023, we anticipate the occupancy rate, which currently stands at 74.0%, ticking up and rental rates to remain stable.
Occupier activity in Saudi Arabia will continue to be centred towards Riyadh, where the average occupancy rate sits at 99.0%. With a lack of existing supply and strong pre-leasing activity taking place in new projects which are not scheduled for delivery in the immediate future, we expect that rental rates this year will continue to increase, albeit at a slower rate than the prior year. In Jeddah and the Eastern Province, we forecast that Grade A rental growth will slow and reach a plateau respectively.
In the UAE, Abu Dhabi’s office market will start to see increased levels of activity, which, alongside constrained levels of new supply, will underpin further rental growth. However, we do envisage that this rate of growth will slow. In Dubai’s office market, the current occupancy rate stands at 88.0%, up from 78.8% a year earlier. With new quality supply not scheduled to be delivered over the course of the next year at least, we expect that rental rates will continue to increase in all segments of the market, albeit at slower rates than we have seen in 2022. Whilst occupier demand is likely to remain unwavering, the lack of supply may hamper market activity over the course of the year.