UAE Real Estate Market Review Q2 2023
The UAE’s GDP is estimated to grow by 2.8% in 2023. Over this period, its hydrocarbon sector is forecasted to contract by 1.6% in 2023, and the UAE’s non-hydrocarbon sector is expected to register a growth rate of 4.5%.
In Dubai’s occupier market, the total number of rental contracts registered reached 29,932, up 41.6% compared to a year earlier.
The elevated occupancy rates continue to drive the increase in average rents in Dubai’s office market, where in Q2 2023, average Prime, Grade A, Grade B, and Grade C rents have grown by 17.2%, 11.0%, 16.4%, and 30.0%, respectively.
In the year through to Q2 2023, a substantial improvement in rental rates has been witnessed in Abu Dhabi’s occupier market, where Prime, Grade A, and Grade B average rents increased by 11.0%, 5.7%, and 7.8%, respectively.
Compared to Q2 2022, average apartment and villa prices in Abu Dhabi registered year-on-year increases of 0.9% and 1.7%, respectively.
Average prices in Dubai’s residential market increased by 16.9% in the year to June 2023, with average apartment prices increasing by 17.2% and average villa prices by 15.1%.
In June 2023, a total of 9,876 residential transactions were registered in Dubai, marking an increase of 18.8% compared to the year prior. Over this period, whilst off-plan market sales increased by 44.9%, secondary market sales marginally dropped by 0.5%.
Despite the recent marginal drop-off in secondary market sales, activity levels in Dubai’s residential market remained robust in the year’s first two quarters, where in the year to date to June 2023, the total transactions volume reached 57,738. This is the highest total on record over this period and marks an increase of 43.2% compared to the same period a year earlier.
Year-on-year, in the year to date to June 2023, the average occupancy rate in the UAE’s hospitality segment of the market rose by 4.1 percentage points. Over the same period, ADRs dropped by 1.9%, however average RevPARs saw an increase of 3.6%.
Average retail rents in Abu Dhabi and Dubai have grown by 16.9% and 38.0%, respectively, in the year to Q2 2023.
In the 12 months to Q2 2023, average industrial rents in Abu Dhabi and Dubai increased by 6.4% and 19.0%, respectively, on the back of strong demand.