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Monday, Apr 15, 2024

Middle East real estate market to see strong growth in 2023, predicts CBRE.

Driven by elevated oil prices and resolute economic growth, the Middle East real estate market will remain strong in 2023, predicts CBRE in its latest report.
CBRE, a US-based commercial real estate services and investment firm, predicts that the Middle East real estate market will experience strong growth in 2023, driven by elevated oil prices and solid economic expansion.

The hydrocarbon and non-hydrocarbon sectors have both recovered well over the past year, with economic growth in the Gulf Cooperation Council (GCC) region surpassing the global average.

The region's GDP growth is projected to reach 2.7 percent in 2023, after a 6.3 percent average growth rate in 2022. The estimated total value of real estate projects currently under construction or planned is $1.36 trillion, with Saudi Arabia accounting for 64.5 percent and the UAE for 21.6 percent.

Other GCC countries account for smaller percentages. While real estate investment is a core part of several countries' diversification strategies, the continued development and regulation relaxation will be crucial to supporting these initiatives.

CBRE anticipates strong performance in the GCC's office market, particularly in Dubai and Riyadh, where rental rates are expected to grow due to constrained supply. However, rental growth may remain anemic in other markets due to subdued demand and oversupply. Occupier activity in Saudi Arabia will remain centered on Riyadh, where the occupancy rate is 99 percent.

CBRE expects rental rates to continue increasing in 2023 due to a lack of existing supply and strong pre-leasing activity. Villa prices are expected to continue to increase, albeit at slower rates, while apartment prices are likely to continue softening, except in Riyadh, where the rate of price growth is expected to moderate.

The return of religious tourism in Saudi Arabia will continue to drive hotel occupancy in the two holy cities and Jeddah, as well as luxury and ultra-luxury developments, leading to an uptick in average daily rates across the Kingdom.
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