Over US $1.36tn in real estate projects planned or underway in the GCC says CBRE
The firm says that Saudi Arabia’s project pipelines itself is worth $877bn
According to CBRE’s ‘2023 Middle East Real Estate Market Outlook’ report, the total value of real estate projects planned or underway across the GCC currently stands at US $1.36tn. The report highlighted that Saudi Arabia comprises 64.5% of that figure, equating to around $877bn worth of projects, followed by the UAE, with 21.6% share of the total regional projects.
In addition, the real estate services firm said that it 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 recording 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%. CBRE also 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,” the report outlined.
In late January 2023, Knight Frank said 219 ultra-prime homes were sold in Dubai in 2022.
It continued, “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.”
Discussing Bahrain’s real estate sector, CBRE said 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 CBRE.
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 continued.
In late January 2023, the Dubai Land Department said it issued 9,047 permits in 2022.
Dubai’s residential rents are said to have 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 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, CBRE explained.
“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,” the report stated.
In mid February 2023, a Deloitte report said it anticipated growth across the residential and commercial sectors in 2023 in Dubai and Saudi Arabia.
