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UAE’s real estate sector to remain resilient in 2023, report says

UAE’s real estate sector to remain resilient in 2023, report says

Despite macroeconomic volatility affecting the global real estate landscape, the UAE has seen strong momentum in the final quarter of 2022, pointing to solid growth in 2023, according to real estate expert JLL.

In the same context, JLL’s UAE Year in Review 2022 report provides a rear-view mirror view of 2022, while highlighting the opportunities ahead this year.

Residential transaction activity in Dubai continued to grow strongly last year. Data from Dubai Pulse further showed that the volume of transactions in the emirate rose by 51% between January and November, while the value of transactions increased by 55%.

It said anecdotal evidence suggested the increase was largely attributable to a surge in demand from foreign buyers.

Faraz Ahmed, Research Associate, JLL Mena, said: “2022 is a year of continued growth for the UAE real estate sector as it continues to pick up pace while benefiting from the country’s solid economic policies, excellent infrastructure, safe haven status and an innate ability to adapt to new trends. ability.”

Ahmed noted: “Even segments that initially faced headwinds this year, such as retail, saw a significant recovery in the last quarter. Looking ahead, we can expect the UAE to continue to attract the attention of regional and international investors strength and deliver desirable products in the industry.” .

Furthermore, 38,000 residential units were delivered last year, bringing Dubai’s total supply to 680,000 units, while in Abu Dhabi, around 6,000 units were delivered, bringing the capital’s residential stock to 279,000 units.

Dubai has a slightly higher level of scheduled completions (41,000 units) by 2023, with the capital expected to complete 6,000 units.

On an annualized basis, average residential sales prices in Dubai and Abu Dhabi rose by 10% and 3%, respectively, in the fourth quarter of 2022. While rents in Dubai rose by 27% over the same period, the capital remained largely flat. Jones Lang LaSalle report.

It said the outperformance of the residential sector reaffirmed Dubai’s relative safe haven status against the backdrop of prevailing geopolitical and economic challenges globally.

According to JLL, the sector saw a marked upturn last year following a prolonged period of depressed office rents in Dubai.

A combination of a strong business environment and limited availability of prime office space led to double-digit growth in rental values, lifting them to 2015 levels.

Grade A rents in Dubai’s CBD will increase by 21% year-on-year in Q4 2022 to reach an average of AED 2,100 psm. Per year. Meanwhile, healthy leasing activity in Abu Dhabi has largely supported an 8% annual increase in Grade A rents to an average of AED1,790 psm. Every year, Jones Lang LaSalle said in its report.

Additionally, rising office demand and a lack of new completions contributed to low levels of availability in both cities. Last quarter, vacancy rates in Dubai and Abu Dhabi fell to 11% and 23%, respectively.

Technology, finance, defense and other professional services industries accounted for a large share of consulting last year. The segment has also witnessed a steady influx of new entrants, driving up total tenant demand and leading to fewer incentives offered by landlords, it added.

Additionally, the scarcity of well-managed Grade A office space is driving occupiers to consider less expensive buildings and locations, presenting an opportunity for owners of Grade B assets to capture the demand for prime floor space by” overflow” to upgrade their existing space.

Overall, Dubai’s office space stock will increase by 30,000 sqm in 2022. Reached 9.1 million square meters. And an increase of about 8,000 square meters. In Abu Dhabi, the capital’s total stock increased to 3.9 million square meters. In 2023, nearly 100,000 square meters. of office space is expected to be delivered in Dubai, more than 35,000 square meters. respectively in Abu Dhabi.

The continued growth of online shopping has prompted retailers to strengthen their digital presence to further grow revenue in an increasingly competitive environment, according to JLL.

While market participants highlighted disrupted supply chains and inflationary pressures as major headwinds last year, there were signs of easing in the second half of the year.

Delivered around 200,000 sqm of retail floor space last year, bringing Dubai’s total stock to 4.63 million sqm, with plans to deliver around 355,000 sqm of space across the city in 2023 – a new super-regional mall and expansion of the same The two existing ones in the category will account for most of them.

In the capital, however, retail stock was unchanged at 2.89 million sqm in 2022, but is expected to increase by 232,000 sqm this year.

After trending downwards in recent years, rents in both cities have largely stabilized. Average rents in primary and secondary malls in Abu Dhabi were flat in the fourth quarter compared to the same period in 2021, while rents in Dubai fell slightly by 1%.

It is worth noting, however, that well-located super-regional malls benefit from repeat customers, leading to higher rents in this segment. Average rents in Dubai’s super-regional malls increased by 3% year-on-year in the final quarter of 2022 compared to the fourth quarter of 2021.

Overall, to differentiate their offerings, owners and franchisees remain focused on introducing unique entertainment concepts to drive foot traffic. Additionally, landlords have been offering favorable lease terms and incentives to attract new international brands, especially in the F&B segment. –trade arab news agency

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