UAE’s Real Estate Market Thrives in 2023: A Comprehensive Review

UAE's Real Estate Market Thrives in 2023: A Comprehensive Review

In 2023, the United Arab Emirates’ real estate market demonstrated robust growth across all major asset classes, defying challenging global economic conditions, according to leading real estate expert JLL. The year was particularly noteworthy for the office and residential sectors, showcasing the UAE’s resilience.

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JLL’s “A Year in Review” report highlighted substantial growth in the UAE’s residential sector, driven by robust demand and ongoing developer activity. Dubai, in particular, experienced a significant 19% increase in average sales prices and rental rates in November 2023 compared to the previous year. Notably, average villa sale prices surpassed the 2014 high by 15%, underscoring the sustained demand.

The report stated that Dubai witnessed the delivery of over 36,000 units, predominantly apartments, bringing the total stock to over 719,000 units. Dubai Pulse data revealed a remarkable 51% year-over-year increase in value and a 43% increase in volume from January to November 2023.

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Abu Dhabi’s off-plan segment launches contributed to a remarkable 102% yearly increase in transaction values and a 77% year-over-year increase in volume. The capital experienced a steady 5% increase in sale prices and a 2% annual rise in rental rates in Q4 2023, with over 5,000 units completed during the year.

Looking ahead to 2024, the residential market is expected to continue its growth, with a note of caution about rising building and land costs. Developers are likely to trend towards smaller units and secondary area launches.

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In the office sector, JLL reported that both newly established companies and those expanding their national footprint drove expansion. Commercial real estate developers capitalized on the growing demand by launching new projects. Free zones in the UAE proactively broadened their scope or initiated new initiatives within their borders.

The total office stock increased to 9.2 million sq m in Dubai, with an additional 44,000 sq m expected in 2024. Abu Dhabi’s stock remained constant in 2023 but is anticipated to add about 112,000 sq m of new office space in 2024.

Faraz Ahmed, Research Director at JLL Mena, emphasized the real estate industry’s resilience, attributing the growth to strong demand in both residential and office sectors. With the government’s focus on economic strengthening and diversification, real estate is poised to be a key driver.

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The average Grade A rent in Dubai’s CBD reached AED 2,425 per sq. m. annually in Q4 2023, a record high due to a 15% year-over-year increase. Abu Dhabi experienced a remarkable 12% year-over-year increase in average city-wide Grade A rents. Despite high rents and a lack of prime space, the market favored landlords, prompting tenants to explore secondary and tertiary areas with lower-quality stock.

The industrial sector in the UAE is witnessing heightened demand from foreign occupiers seeking superior quality facilities near air and seaports, aligning with the country’s economic diversification efforts.

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In conclusion, the UAE’s real estate market’s resilience and growth in 2023 reflect a promising trajectory for the sector, driven by strong demand, favorable investment conditions, and government initiatives for economic development and diversification.

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