Dubai’s real estate sector had its best year ever in 2023: Savills

Dubai’s real estate sector had its best year ever in 2023: Savills

Dubai's real estate sector had its best year ever in 2023_ Savills

A recent industry report claims that 2023 was the best year ever for Dubai’s real estate market’s residential sector, with transaction activity reaching an all-time high of 118,200 units and a 29 percent annual growth.

For the first time ever, more than 100,000 transactions were made in the emirate’s real estate market.

Dubai’s real estate market has reportedly experienced steady growth over the past year, according to a report by international real estate services provider Savills. This growth has reportedly been fueled by the nation’s expanding and diverse economy as a whole, regulations like the most recent modification to the qualifications for real estate investors to obtain the Golden Visa, and the city’s expanding expat population.According to the report, Dubai is among the few cities globally that have witnessed steady demand growth since the COVID-19 restrictions were lifted.

“Under-construction properties dominated demand during the year as 55 percent of the units sold were off-plan,” the Dubai Property Market Report for 2023 by Savills said.

It said that while end-user activity has somewhat declined, demand has shifted throughout the year, especially in the second half, toward investments.

A total of 65,000 off-plan units were sold in 2023, with 53,200 ready units sold.

Locations like Jumeirah Village Circle, Dubai Hills Estate, Arabian Ranches, and Dubai Sports City were all bustling with transaction activity.

Apartments continued to be the most traded property type in 2023, accounting for 78% of all transactions, according to Savills.

The real estate sector will gain from the non-oil sectors’ significant growth over the last two years, ongoing health, and advantageous position for growth over the coming year, according to Swapnil Pillai, Associate Director of Research at Savills Middle East.

“However, there may be a risk of oversupply for select assets across a few locations, which may limit any significant increase in average prices going forward,” he said.

Dubai office real estate boom in 2023

The study claims that government initiatives to support job creation, ongoing economic growth, the expansion of the non-oil sector, and ongoing efforts to make doing business easier caused a spike in demand for office real estate in 2023.

Throughout the year, there was a concentrated demand for premium green-certified assets; this trend is being driven by a gradual but evident move towards more sustainable operations.

The scarcity of highly sought-after Grade A assets has resulted in lower vacancy rates and higher rental rates.

According to Savills, businesses, especially those in the financial services and advisory/consultancy industries, were very interested in the DIFC micro-market and the Grade A developments that surrounded it. Consequently, the average annual increase in rent in DIFC was 22%.

The general theme for 2023 in Dubai, according to Paula Walshe, Director of Transactional Services at Savills Middle East, was one driven by expansion and new market entry, in contrast to other international markets where the demand for office space is still below the pre-pandemic average.

“Mergers and acquisitions (M&A) activity across the country also led to consolidation-led demand for office space across the city,” Walshe said.

The city has seen a steady increase in the number of co-working space providers due to the increased demand for well-managed spaces that offer flexible and reasonably priced options.

Industrial real estate thrives

The non-oil sector’s continued growth is expected to sustain market activity into 2023, making Dubai’s industrial and logistics sector one of the most resilient real estate asset classes in the city, according to the report.

High-quality assets—especially larger facilities exceeding 10,000 square meters—remain scarce as occupiers expand their warehouse footprint.

Savills states that companies are in great demand for built-to-suit warehouse space as they plan for future expansions and invest in modern warehouse facilities with improved operational functionality and sustainable features.

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