What's at Stake this week?

March 12, 2023

Dubai’s relentless pursuit of sustainable development and its commitment to the reduction of carbon emissions in line with the 2040 targets has yielded an innovative solution for the hospitality sector! A new carbon calculator tool has been unveiled, enabling hotels and resorts to monitor their ecological impact by tracking energy and water consumption, waste generation, and transportation emissions. This initiative marks a significant step toward fostering environmental stewardship and contributes to the global effort toward a more environmentally friendly future. Let’s have a look at some other takeaways from this week 👇

Stake Shorts

A construction boom worth over $1Tn

The real estate market in the Middle East is set for a positive outlook this year as elevated oil prices and economic growth are expected to support strong levels of occupier and investment activity, according to a recent report by leading real estate services and investment organization, CBRE. The report notes that the total value of real estate projects planned or underway in the GCC is now worth USD $1.36Tn, with Saudi Arabia leading the way with 64.5% of the total regional projects, followed by the UAE with 21.6%. Meanwhile, Bahrain, Kuwait, Oman, and Qatar share 1.7%, 4.4%, 4.6%, and 3.3% of the total respectively.

These figures go to show how extensive a role the UAE and Saudi Arabia are playing in dominating the ongoing construction boom in the Middle East over the course of the year ahead.

The report also commented on price performance in the GCC’s residential sector as it renders it “fragmented” last year, with Dubai and Riyadh seeing significant price growth above the regional average. In Saudi Arabia, price performance in both the apartment and villa market segments is forecast to become more divergent over the coming year as villa prices are expected to increase and prices of apartments are more likely to continue to soften.

UAE real estate, in particular, stood out in 2022, as it was the only market to witness growth in both transaction volume and price growth across all its cities. CBRE expects prices to continue to increase in Dubai’s apartment and villa markets, albeit at a slower rate, with a slight dip in transaction volumes, and anticipates a growth in transaction volume and prices to be recorded in Abu Dhabi.

The bottom line? Overall, the outlook for the real estate market in the Middle East is positive, with the ongoing construction boom led by the biggest economies in the region, UAE and Saudi Arabia, driving growth.

Market Zoom: Dubai

How did Dubai real estate perform in February?

According to a recent report by Property Finder, Dubai’s real estate market maintained its upward trend in February 2023 as sales transactions grew a staggering 43%, attributed to high demand from foreign investors and end-users. Data from Dubai Land Department show that 8,994 total property transactions worth AED 26.7Bn (+64% YoY) were recorded last month, marking a 42.1% YoY increase. 

Of these transactions, AED 12.8Bn are attributed to apartment sales across over 6K units, a 56.1% YoY increase, and AED 8.5Bn to villas across 2K+ units, a 16.4% YoY increase. 

The most searched areas for apartments were Dubai Marina, Downtown Dubai, Business Bay, Palm Jumeirah, and Jumeirah Village Circle, while Dubai Hills Estate, Palm Jumeirah, Arabian Ranches, and Mohammed Bin Rashid City were the most desired areas to rent villas/townhouses. In terms of property preferences, Property Finder has recorded a “significant evolution for both owners and tenants”, as reported by Zawya and summarized below:

  • 59.4% of people looking to own property are searching for an apartment, 40.6% are interested in villas/townhouses.
  • 80% of tenants looking to rent a property are searching for apartments, while 20% are interested in villas/townhouses.
  • 41% of these tenants are looking for 1-bed units while 33% are interested in 2-bed units. 20% are searching for studio apartments.
  • 65% of the tenants looking for apartments prefer furnished properties, while 33% were looking at unfurnished units.

Did you know? Dubai has established itself as one of the world’s most sought-after markets for luxury residential properties, attracting high-net-worth buyers who purchased dozens of multimillion-dollar homes worth at least $10 million last year. According to global property consultant Knight Frank, the city registered 219 sales of prime residential properties worth $10 million or more, making it the fourth highest in the world after New York, Los Angeles, and London. The total value of these high-end properties in Dubai’s prime residential areas, including The Palm Jumeirah, Emirates Hills, and Jumeirah Bay Island, was estimated to be worth USD $3.8Bn.

Dubai also experienced the largest increase in luxury property prices last year at 44.2%, significantly higher than other cities like Aspen, which came in second with a 27.6% growth, Riyadh at 25%, Tokyo at 22.8%, and Miami at 21.6%. 

The bottom line? Despite the pandemic’s challenges, Dubai has managed to maintain a strong economy, further enhancing its reputation as a desirable location for high-end real estate investments. With the availability of new residency visas, the growing concentration of wealth in the city, and an undersupplied market especially when it comes to high-end luxury properties, it is not surprising that Dubai has become one of the world’s most coveted markets for residential properties.

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