1、REPORT2023 UAE Real Estate Market Outlook Mid-Year Review Intelligent InvestmentUAEREAL ESTATECBRE RESEARCHAUGUST 20232CBRE RESEARCH 2023 CBRE,INC.Intelligent Investment2023 Real Estate Market Outlook Mid-Year Review|UAEForewordsee rental growth in most parts.Albeit as previously stated,we expect to

2、 see these rates to moderate.The lack of supply simply makes many of these markets landlord-favoured,even if demand softens somewhat over the remainder of the year.The residentialmarket is where we have underestimated demand,substantially so,and in both Abu Dhabi and Dubai.That being said,we neverth

3、eless maintain our outlook that the rate of price growth by year end will have tapered,but still remain positive.This is already happening within the rental segment of the market,something which we expect to continue.Finally,in the hotels sector,we expect that occupancy rates will continue to remain

4、 strong,particularly as we head towards high season.More so,we no longer expect a softening in ADRs and hence,we expect RevPARs to post positive performance for the year.-Year Review;a report in which we look back at the predictions we made at the beginning of the year and evaluate what we got right

5、,and what we got wrong.Global economic headwinds,led by tighter monetary policy regimes and persistently high inflation in major economies,have led to downgrades in by 3.5%,its latest forecast now puts this number at 2.2%.However,the hydrocarbon sector,which owing to the OPEC+output cuts and lower p

6、rices,is forecast to contract by 3.3%,compared to the previously expected growth rate of 2.7%in January 2023.The non-hydrocarbon sector,on the other hand,is currently estimated to register a growth rate of 4.2%in 2023.This is up from the 3.9%growth rate which was forecast in the beginning of the yea

7、r.Despite a weaker than expected hydrocarbon sector and even amidst what we now expect will be a prolonged rates cycle,which is likely to impact demand,CBRE continues to maintain many of its forecasts made in early 2023.industrial and logistics,office,and even segments of its retail market means tha

8、t we are likely to continue toTaimur KhanHead of Research,Middle East and North Africa Market Outlook published in February Overall Forecast AccuracyUAE 2023 Mid-Year Review 01A sector by sector review of the predictions we made at the beginning of the year and evaluate what we got right,and what we

9、 got wrong.4CBRE RESEARCH 2023 CBRE,INC.Intelligent Investment2023 Real Estate Market Outlook Mid-Year Review|UAEOFFICES UAE 2023 Mid-Year Review first half of 2023,with new office rental contract registrations up 12.4%year-on-year.Rents have continued to increase although the annual rate growth rat

10、es have moderated,across all segments of the market as expected.In Dubai,whilst occupier demand remains strong and has driven average occupancy levels to 92.7%as at Q2 2023,the lack of available stock is impacting take-up.Average rents have continued to rise,where in the year to Q2 2023,Prime,Grade

11、A,Grade B,and Grade C rents have grown by 17.2%,11.0%,16.4%,and 30.0%,respectively.Only the Grade C segment has not shown a moderation in its rate of change since the start of the year.Forecast made in February 2023alongside constrained levels of new supply,will underpin further rental growth.Howeve

12、r,we do envisage that this rate of growth will slow.scheduled to be delivered over the course of next year,we expect that rental rates will continue to increase in all segments of the market,albeit at slower rates than we have seen in 2022.Whilst occupier demand is likely to remain unwavering,the la

13、ck of supply may hamper market activity over the course of the year.Mid-year review01RESIDENTIAL In Abu Dhabi,we are forecasting growth in both the volume of transactions and the rate of price growth over the course of the coming year.In Dubai,whilst we do expect transaction volumes to soften year-o

14、n-year,we expect that prices will continue to increase,across both the apartment and villa segments of the market,albeit at a slower rate.In 2023,regarding rents in Abu Dhabi,in the villa segment of the market,we expect that the rate of growth is likely to remain positive,although will remain in the

15、 low single digits.In the apartment segment of the market,we are forecasting positive rental growth to return over the course of the year,however,the growth rates will not be material.see this happen at the same pace.02Year-on-year,in the year to date to H1 2023,the total number of transactions in A

16、bu Dhabi has increased by 94.1%.This has been underpinned by a 160.4%increase in off-plan transactions over this period.grow at a faster rate,for apartments we have seen this rate moderate in Q2.For the latter,we still expect this trend to reverse over the course of the year.In Dubai,the total volum

17、e of transactions has broken records in the first half of the year,up 43.3%year-on-year in the year to date to H1 2023.This surge in demand has also underpinned higher than expected price growth.On the rental front,in Dubai,the growth rate of average rents has moderated in each of the first six mont

18、hs of the year.In Abu Dhabi,the rental market to date has performed as forecasted.Forecast AccuracyForecast Accuracy5CBRE RESEARCH 2023 CBRE,INC.Intelligent Investment2023 Real Estate Market Outlook Mid-Year Review|UAEHOTELS-on-year in the year to date to June 2023 by 1.9%.Over the same period,we ha

19、ve seen the occupancy rate rise by 4.1 percentage points,to reach 75.7%.This increase in occupancy has been at a faster rate than expected and as a result,we have seen RevPARs increase by 3.6%over the same period noted above.This better than expected performance can be in parts put down to the reope

20、ning of the deciding and being induced into breaking-up their trips to the continent,which has helped underpin stronger performance.This,in turn,is helping drive demand and profitability in what is usually the start of the low season.The beachfront luxury segment of the market has underperformed the

21、 wider market in occupancy,ADR and RevPAR terms.Forecast made in February 2023In the UAE,although we expected occupancy rates to continue to increase,we forecast that ADRs will soften over the course of the year,which will put pressure on RevPARs.The beachfront luxury segment of the market is expect

22、ed to continue registering outperformance,both in terms of occupancy and ADRs.Mid-year review03RETAIL We expect that we will see a convergence in performance,with Abu Dhabi likely to see rental growth accelerate and Dubai likely to see considerable moderation.In Abu Dhabi,many retailers have delayed

23、 expansion plans due to the prolonged COVID-19 restrictions which were in place in the capital in 2022,and we are likely to see many revisit these plans.In Dubai,we may see activity levels taper-off during the year,particularly in the Prime segment of the market,due to a lack of available supply and

24、,above all,in the F&B sector.04As we reach the halfway point of 2023,we have indeed seen a convergence in rental performance.In Abu Dhabi and Dubai,average rental growth reached 16.9%and 38.0%in the year to Q2 2023,up and down from the 5.6%and 51.5%year-on-year growth rates registered in 2022 respec

25、tively.In Dubai,year-on-year in the year to date to June 2023,we have seen new retail contract registrations fall by 16.2%.Whilst occupier demand remains very strong,the availability of prime quality stock is curtailing activity levels.In Abu Dhabi,long-awaited concepts,both new and repositioned,hav

26、e underpinned an increase in the number of new retail contract registrations in Q2 2023,although a sluggish Q1 has meant the total is down marginally y-o-y.Forecast AccuracyUAE 2023 Mid-Year Review Forecast Accuracy6CBRE RESEARCH 2023 CBRE,INC.Intelligent Investment2023 Real Estate Market Outlook Mi

27、d-Year Review|UAEINDUSTRIAL AND LOGISTICS On the whole,in the 12 months to June 2023,we have seen rental growth continue in the industrial and logistics sector over the course of the year,with average rents in Abu Dhabi and Dubai increasing by 6.4%and 19.0%,respectively.As at Q2 2023,average rents i

28、n Abu Dhabi stood at AED 393 per square metre and in Dubai at AED 41 per square foot.However,whilst we have seen uniform growth across sub-markets in both cities,the rate of growth has certainly been very polarised.Institutional quality stock has recorded significant rental increases over the first

29、half of the year,whereas secondary stock,in most cases,has seen more muted rental growth in comparison over this period.Forecast made in February 2023With reliance on the asset class expected to only increase,we feel that the sector will continue to record rental growth unanimously irrespective of l

30、ocation.We will,however,see polarisedrates of growth across markets.Although in key hub markets such as Abu Dhabi and Dubai we are expecting new supply to be delivered over the course of the year,we do not envisage that this will have a negative impact on prices.In fact,where this is institutional g

31、rade stock,we expect that it is more likely to set new benchmark rents.As a result,this may also cause fragmentation in rental rate performance going forward,with poorer quality stock likely to see rental rates come under pressure.Mid-year review05UAE 2023 Mid-Year Review Forecast AccuracyInvestment

32、 Yields Guide02outlook for the remainder of the year.8CBRE RESEARCH 2023 CBRE,INC.Intelligent InvestmentReal Estate Market Outlook|Middle EastInvestment Yields Guide UAEQ1 2023Q2 2023OutlookPrime Offices 6.75%7.25%6.75%7.25%Stable Grade A Offices7.25%7.50%7.25%7.50%Stable Prime Residential6.25%7.00%

33、6.00%-6.75%Stable Residential7.00%7.50%6.75%7.25%StableRetail(Malls)6.75%8.00%6.75%8.00%Stable Grade A Industrial and Logistics 7.50%7.75%7.50%7.75%Stable Industrial and Logistics 8.00%8.50%8.00%8.50%Stable Luxury Hotels 6.50%7.75%6.75%7.75%Stable Midscale to Upscale Hotels8.00%8.75%8.00%8.75%Stable

34、 UAE Investment YieldsSource:CBRE Research Copyright 2023.All rights reserved.This report has been prepared in good faith,based on CBREs current anecdotal and evidence based views of the commercial real estate market.Although CBRE believes its views reflect market conditions on the date of this pres

35、entation,they are subject tosignificant uncertainties and contingencies,many of which are beyond CBREs control.In addition,many of CBREs views are opinion and/or projections based on CBREs subjective analyses of current market circumstances.Other firms may have different opinions,projections and ana

36、lyses,andactual market conditions inthe future maycause CBREscurrent viewsto later beincorrect.CBREhasno obligation to update itsviewshereinifits opinions,projections,analyses ormarket circumstances laterchange.Nothing in this report should be construed as an indicator of the future performance of C

37、BREs securities or of the performance of any other companys securities.You should not purchase or sell securitiesof CBRE or any other companybased on the views herein.CBRE disclaims all liability forsecurities purchased or sold based on information herein,and by viewing this report,you waive all cla

38、ims againstCBRE as well as against CBREs affiliates,officers,directors,employees,agents,advisers and representatives arising out of the accuracy,completeness,adequacy or your use of theinformationherein.Taimur KhanHead of Research+971 52 281 Hattan AlsharifSenior Research Analyst+966 50 029 Tatiana

39、El BaziResearch Analyst+971 58 593 Daniel McCullochHead of Valuation+971 50 656 Ali Manzoor Head of Hotels&Tourism+971 58 149 Scott KeaneyHead of Project Management+971 52 640 Michael YoungHead of Advisory&Transactions+971 56 603 Michael HeitmannHead of Consulting+971 50 794 Lindsay McQuillanHead of

40、 Property Management+971 52 640 Nicholas MacleanManaging Director,MENA+971 44 37 Pedro RibeiroGeneral Manager,Saudi Arabia+966 55 269 0736 Richard BothamGeneral Manager,Bahrain+973 39 60 ContactsHenry Chin,Ph.D.Global Head of Investor Thought Leadership&Head of Research,Asia P.hkAbhinav JoshiHead of Research,India,Middle East&North Africaabhinav.joshicbre.co.inMehdi AliouatHead of Marketing&Communications+971 52 100