UAE Real Estate Set For Expansion Across Major Asset Classes

Building on the strong growth momentum and high levels of buyer demand experienced in 2023, the UAE’s real estate sector is expected to continue its upward trajectory this year as well despite a softening global outlook, said a panel of experts at an event hosted by real estate industry expert JLL.

Robust economic fundamentals, government initiatives, and increased investor confidence are driving new opportunities for sustained growth across asset classes in the UAE’s rapidly evolving market, especially in the short and medium term, said the industry analysts at the forum held under the topic ‘Navigating the Growth Spectrum: Exploring Strategies for Sustained Success.’

With the rise of private and sovereign wealth as well as increased infrastructural spending, JLL also outlined promising prospects for the real estate sector in the wider GCC, a region less sensitive to the global challenges of inflation and hikes in interest rates.

The positive sentiment and performance of various macroeconomic indicators reflect trust and resilience both in the UAE and GCC markets, even as Dubai continues its run as a dominant force in the region’s property sector, said the JLL experts.

The UAE’s position as a financial and business hub has strengthened demand across the major asset classes and global institutions are actively eyeing investment opportunities in the country.

Buoyed by its high desirability index, residential, hospitality, and office remain the top-performing segments in the UAE. Commercial real estate represents a competitive landscape with supply-demand gaps for high-quality spaces.

Core asset classes continue to generate interest in the UAE’s capital market and the aggressive pricing strategy pursued by asset managers witnessing prime office and hospitality yields about to break the 7% threshold, they stated.

An increased focus on sustainability and tech innovations are further reshaping the real estate landscape where green building practices and energy-efficient designs are gaining prominence and becoming a must-have. Financial institutions too have expanded their competitive lending offerings for green projects.

Although in the UAE, Dubai has experienced an uptick in luxury off-plan property launches, the residential segment most in demand is below AED 3 million, expanding the scope of opportunities for developers to meet the growing desire for affordable housing options.

James Allan, CEO, Middle East and Africa (MEA), JLL, said: “A robust and resilient real estate industry has established itself as a firm pillar of the UAE’s diversification agenda and is expected to deliver a strong performance in 2024 even under inflationary pressures. The positive outlook for growth and upward trends in the investment climate offer stability in a time of global uncertainty, reinforcing the UAE’s position as an attractive choice for regional and international real estate investors.”

During JLL’s event, the stalwarts estimated that despite the annual increases in both value and volume of transactions in the residential segment, the pace of increase is likely to slow down in the year ahead.

Even as luxury remains a niche segment, branded residences, wellness, and lifestyle-oriented real estate projects enjoy solid growth alongside co-living spaces that deliver affordable, convenient, and inclusive living solutions for young and single professionals, they stated.

Despite escalating land prices and construction costs, the positive momentum of the UAE’s residential market is expected to continue in 2024 with Dubai and Abu Dhabi anticipated to deliver approximately 34,000 units and 8,000 units, respectively, they added.

On the office market, JLL said strong demand for office space was observed in both cities. The market remained firmly in favour of landlords, as rents continued to increase due to limited availability of quality space and rising inquiries from occupiers, said the JLL experts.

Despite a growing preference for quality over quantity, Grade A offices were limited in supply while changing work patterns and remote working opportunities led to a surge in demand for flex offices.

Strong demand for high-quality logistics and warehousing solutions is stimulating the industrial sector where the UAE holds a leadership position in GCC and is ranked 7th globally on the Logistics Performance Index.

On the retail sector, the JLL experts said shopping malls were transforming inactive areas into vibrant hubs and introducing clinics, fitness facilities, and other services to align with technology and e-commerce trends while homegrown concepts including F&B and convenience were performing well in community malls.

Meanwhile, sustained growth in the hospitality sector is being driven by a well-balanced calendar of events as increasing tourist volumes, for leisure and business, remain a key driver of this segment, they added