The total value of real estate projects planned or underway across the GCC currently stands at $1.36 trillion, of which Saudi Arabia has the lion's share of 64.5% equating to around $877 billion projects followed by UAE with 21.6% share of the total regional projects, according to leading real estate expert CBRE.
CBRE in its recent '2023 Middle East Real Estate Market Outlook' stated that its anticipates a positive outlook for the real estate sectors across the Middle East this year, as elevated oil prices and resolute economic growth are expected to support strong levels of occupier and investment activity.
The economies of GCC countries are expected to continue to record strong rates of growth in 2023. Both the hydrocarbon and non-hydrocarbon sectors are expected to continue to provide material contributions to headline growth rates. The average GDP growth across GCC countries in 2023 is set to reach 2.7%, it added.
CBRE pointed out that the price performance in the GCC’s residential sector was fragmented last year.
"First, on a positive note, where we have seen prices decline, it has been relatively marginal. However, price growth in Dubai and Riyadh have significantly outpaced the regional average. In 2022, the UAE was the only market to record price growth and transaction volume growth across all cities and sectors," it stated in the report.
"In Dubai, whilst we do expect transaction volumes to soften year-on-year, we expect that prices will continue to increase, across both the apartment and villas segments of the market, albeit at a slower rate. In Abu Dhabi, we are forecasting growth in both the volume of transactions and the rate of price growth over the course of the coming year," it added.
On Bahrain, CBRE said the villa prices are expected to record low-single digit price growth. In the apartment segment of the market, given new launches and existing levels of supply, prices are forecast to decrease more substantially.
In Saudi Arabia, price performance in both the apartment and villa segment of the market is likely to become more polarised over the coming year.
Villa prices are expected to continue to increase, albeit at slower rates, whereas apartment prices are likely to continue to soften. However, we do not anticipate this trend occurring in Riyadh, where the rate of price growth is expected to moderate, stated the property expert.
On par with trends in its sales market, in Bahrain, we are expecting villa rents to increase marginally in 2023, whereas, over the same period, average rents are forecast to decrease further, it added.
According to CBRE, Dubai’s residential rents reached their highest level on record in 2022. Throughout this period, average apartment rents increased by 27.1%, and average villa rents rose by 24.9%.
Demand has also increased significantly with the number of tenancy contracts registered increasing by 10.8% year-on-year, however, new registrations fell by 7.0%. In 2023, rents in Dubai will continue to increase uniformly, however we will not see this happen at the same pace, stated the industry expert.
"For Abu Dhabi, in the villa segment of the market, we expect that the rate of growth is likely to remain positive, although will remain in the low single digits. In the apartments segment of the market, we are forecasting for positive rental growth to return over the course of the year, however, the growth rates will not be material," it added.-TradeArabia News Service
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