UAE Real Estate Yields Expected to Remain Strong: Study

UAE Real Estate Yields Expected to Remain Strong: Study

A recent report released on Wednesday reveals that prime residential real estate in the United Arab Emirates is poised to yield between 6.25% and 7%. According to CBRE Research’s 2024 Market Outlook for Middle East real estate, residential properties are projected to yield between 7% and 7.5%.

Within the office sector, the anticipated yields for prime offices range from 6.5% to 7.25%, while for grade A offices, it is expected to be between 7.5% and 7.5%.

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The report highlights that there are currently $409 billion worth of real estate projects planned or under construction in the UAE, representing 24.4% of all projects in the Gulf Cooperation Council region.

Despite market fluctuations, the UAE remains the only market in which both price and transaction volume growth were recorded in 2023, particularly in Abu Dhabi, where transaction volumes are expected to continue growing throughout 2024. However, the report also notes that existing and outdated stock may underperform the market.

In Dubai, CBRE anticipates a slight decrease in transaction volumes but foresees continued price growth in the apartment and villa segments, albeit at a moderated rate compared to previous years.

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Regarding the office space category, CBRE predicts that occupier activity in the UAE will remain robust, especially for Prime and Grade A assets, due to limited supply and increasing demand. Rental rates are expected to continue rising, albeit at a slower pace than before.

In the retail sector, average rents saw significant increases in both Abu Dhabi (10.7%) and Dubai (17.6%) last year. Moving forward, while demand in both cities is expected to remain strong, concerns persist regarding the lack of quality stock, particularly in Dubai. Despite this, rental rates are projected to continue increasing, albeit at a moderated rate.

As the real estate landscape in the UAE continues to evolve, strategic insights from CBRE provide valuable guidance for investors and stakeholders navigating the dynamic market dynamics.

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