UAE Real Estate Market Review Q3 2023

Key Takeaways:

1. The UAE’s GDP is expected to grow by 2.8% in 2023. Over this period, the country’s hydrocarbon sector is expected to contract by 0.8%, and the non-hydrocarbon sector is forecast to record a growth rate of 4.2%.
2. Robust levels of demand continue to be seen in Dubai’s occupier market in the third quarter of 2023, where data published by the Dubai Land Department show that a total of 35,822 rental contracts were recorded, registering a rise of 40.7% from the year prior.
3. The lack of availability of quality stock, paired with the elevated levels of demand, continues to drive rental growth in Dubai’s office segment of the market, where in the year to the third quarter of 2023, average Prime, Grade A, Grade B, and Grade C rents increased by 10.7%, 14.4%, 20.1% and 30.0%, respectively.
4. Rental performance has improved further in Abu Dhabi’s occupier market on the back of the rising levels of demand, where in the year to the third quarter of 2023, average Prime, Grade A, and Grade B rents increased by 7.0%, 8.6%, and 13.0%, respectively.
5. In the year to the third quarter of 2023, average apartment prices in Abu Dhabi increased by 0.9%, whilst average villa prices marginally dropped by 0.1%.
6. In the year to September 2023, average residential prices in Dubai rose by 19.6%, where over this period, average apartment and villa prices increased by 19.7% and 18.9%, respectively.
7. In September 2023, activity levels softened in Dubai’s residential market amidst a contraction in the off-plan market, where a total of 7,523 transactions were registered, down by 8.3% from the year prior. This softening has been driven by a 41.5% drop in off-plan sales, whilst secondary market sales increased by 30.5%.
8. That being said, despite this monthly slowdown, in the year to date to September 2023, the total volume of residential transactions in Dubai reached 87,163. This is the highest figure ever recorded over this period.
9. The average occupancy rate within the UAE grew by 4.8 percentage points, year-on-year, in the year to date to September 2023. Over this period, although the country’s ADR declined by 1.2%, we saw the average RevPARs increase by 5.6%.
10. In the retail segment of the market, in the year to the third quarter of 2023, significant growth in lease rates has been witnessed in both Abu Dhabi and Dubai, with average rents rising by 16.9% and 36.8%, respectively.
11. The market fundamentals within the industrial and logistics sector continued to drive higher leasing rates in Abu Dhabi and Dubai, where rental rates grew by 7.5% and 17.7%, respectively, in the year to the third quarter of 2023.