UAE Real Estate Market Review Q1 2023

Strong levels of demand across all sectors continue to underpin exceptional performance in the UAE’s real estate market.

Key Takeaways

1. The UAE’s GDP is forecast to grow by 2.4% in 2023, where its hydrocarbon sector is expected to contract by 1.3% in 2023, whereas its non-hydrocarbon sector is estimated to record a growth rate of 3.8%.
   
   
2. A total of 34,482 rental contract registrations have been recorded in Dubai’s occupier market during the first quarter of 2023, marking a year-on-year increase of 40.7%.
   
   
3. Increased occupancy levels and limited availability of stock in Dubai’s office market have underpinned growth in rental rates, where average Prime, Grade A, Grade B, and Grade C asking rents have increased by 20.2%, 13.5%, 18.7%, and 28.7%, respectively.
   
   
4. Rental performance in Abu Dhabi’s office market has considerably improved on the back of increasing demand levels and lack of supply, where in the year to Q1 2023, average Prime, Grade A, and Grade B asking rents have grown by 19.1%, 8.8%, and 10.7%, respectively.
   
   
5. In the year to March 2023, Abu Dhabi’s average apartment prices grew by 1.4% and villa prices by 1.6%.
   
   
6. Average residential prices in Dubai grew by 12.8%, in the year to March 2023. Over this period, average apartment and villa prices rose by 12.4% and 14.8%, respectively.
   
   
7. The total volume of transactions in Dubai’s residential market hit the highest monthly figure on record in March 2023, where 11,605 residential transactions were recorded, registering an increase of 47.4% from the previous year.
   
   
8. In the first quarter of 2023, a total of 29,332 residential transactions have been recorded in Dubai. This is the highest total ever registered during the first quarter of the year and a year-on-year to Q1 2023 growth of 52.4%.
   
   
9. In the hospitality segment of the market, despite the average occupancy rate marginally increasing by 0.6 percentage points, year-on-year, in the year to date to March 2023, ADRs have registered a drop of 2.2%, and as a result, we have witnessed average RevPARs drop by 1.5%.
   
   
10. In the 12 months to March 2023, average retail rents in Dubai and Abu Dhabi have grown by 41.1% and 5.6%, respectively.
    
    
11. Average industrial rents in Abu Dhabi and Dubai have increased by 5.9% and 16.2%, respectively, in the year to Q1 2023.