CBRE, a real estate consultancy, stated that the real estate market in the UAE in this year will continue to see a positive outlook because of a lack of supply and high demand in some important sectors.
The company published a report in which it talked about the performance of the real estate market in the UAE in 2023.
According to report, the GDP growth forecasts for the UAE as well as globally are down because of global economic headwinds, which include consistently high inflation and tight monetary policies in leading economies.
At the beginning of the year, there was 3.5% growth expected in the UAE economy, but this number has now downgraded to 2.2%.
But, this downgrading is primarily due to the contraction seen in the hydrocarbon sector in the UAE, which expected to decline by 3.3%, even though in January, it had been expected to grow 2.7% this year.
On the other hand, the non-hydrocarbon sector had previously been estimated to record growth of 3.9% this year, but now the estimates have risen to 4.7%.
Even though rates cycle have been prolonged and the hydrocarbon sector has weakened, which is likely to change demand patterns, CBRE is still sticking to many of the forecasts made in the beginning of the year.
During the first half of 2023, the office market in Abu Dhabi has remained strong, with a 12.4% rise in new office rental contract registrations.
There has also been an increase in rent even though there have been moderate annual growth rates in almost all market segments.
Meanwhile, demand also remains strong in Dubai and occupancy levels have climbed to 92.7% as of the second quarter of the year.
As far as residential real estate is concerned, Abu Dhabi has seen the total number of transactions rise by 94.1%.
CBRE believes that the trend will reverse for the latter by the end of the year. As for Dubai, there have been record-breaking total number of transactions in the first half of the year.
As far as rentals in Dubai are concerned, the first half of 2023 saw moderate growth in the average rent and the rental market in Abu Dhabi has performed as per forecasts.
Retail real estate
The average rental growth in Dubai and Abu Dhabi climbed 38% and 16.9% in the year to the second quarter of 2023.
This had been 51.5% in Dubai in the previous year and 5.6% in Abu Dhabi. According to CBRE, there was a 16.2% decline in new retail contract registrations in Dubai year-on-year.
Even though there was strong occupier demand, activity levels were taking a hit due to the lack of prime quality stock.
As far as Abu Dhabi is concerned, here was a rise in the number of new retail contract registrations due to long-awaited concepts in the second half of the year.