The real estate sector in the UAE is witnessing significant momentum and attracting considerable interest from both regional and foreign investors. The strength and resilience of the sector are evident in its strong performance in all segments, specifically residential, commercial, retail, and hospitality, despite the global economic headwinds.
Recent data indicates significant growth in the UAE real estate market. For example, Dubai’s residential sector has witnessed a 51% increase in transaction volumes between January and November 2022, while the total value of transactions increased by 55% over the same period. The increase is mainly driven by surging foreign demand for property in Dubai, which is considered a safe haven amidst heightened global geopolitical and economic risks. It is also important to note that 38,000 residential units were delivered in Dubai in 2022, raising the total supply to 680,000 units, while 6,000 new units were delivered in Abu Dhabi, raising its total stock to 279,000 units.
The office space segment also witnessed a remarkable turnaround in 2022. In Dubai, rents for Grade A offices in the Central Business District (CBD) grew 21% on a yearly basis, touching AED 2,100 per square meter per annum. In Abu Dhabi, Grade A rents rose 8% annually to touch an average of AED 1,790 per square meter per annum. This increase was driven by robust business conditions and limited stock in the market for prime office space, which had the effect of raising rental values and reducing vacancy rates to 11% in Dubai and 23% in Abu Dhabi.
The hospitality sector in the UAE has seen a strong bounce, with average occupancy levels increasing to 72% in Dubai and 69% in Abu Dhabi during the first 11 months of 2022. This uptick in performance is attributed to major events, including the FIFA World Cup in Qatar and the Abu Dhabi F1 Grand Prix, which saw hotel occupancy increase to record levels at the end of the year.
Retail also registered growth, with over 6,000 new contracts entered into in Q3 2022 in Dubai, following up with a robust pipeline of new retail spaces. The continued ascent of online shopping has driven retailers to enhance their digital footprint, further boosting revenues in a competitive environment.
In this growing landscape, Origin Private Office has expressed its desire to bring a material impact to the UAE real estate sector. Origin’s strategic entry is likely to take advantage of the burgeoning market opportunities in this space, with a heavy focus on high-demand areas like luxury residential and commercial developments. The firm hopes to avail of the UAE’s favorable economic policies, excellent infrastructure, and global connectivity in laying a good foundation.
Recent policy reforms in the UAE, such as the cancellation of the AED 1 million minimum down payment rule for obtaining a Golden Visa through real estate investment, will also give the market an added push. This is likely to attract a wider range of investors and increase demand for better-quality real estate offerings.
Another focus area is that of sustainability. Developers like ZāZEN Properties are setting benchmarks in this field with projects like ZāZEN Gardens in Al Furjan, which aspires to become the first LEED Gold-certified residential development in the region. This is in line with national initiatives such as UAE Net Zero 2050 and the Dubai 2040 Urban Master Plan, thereby exemplifying a commitment to sustainable development.
The UAE real estate industry is truly booming, resulting from strong demand in all real estate segments: residential, commercial, hospitality, and retail. That Origin Private Office has an eye on this market is significant for both the real estate segment and the potential investors, assuring high confidence in the region’s real estate landscape. With strategic reform policies and a strong stand on sustainability, the UAE will continue ascending on its growth trajectory and is likely to attract global investments in real estate.
