The state of the GCC real estate sector in five CBRE charts

07 March 2023 Consultancy-me.com 4 min. read

As the dust settles on a bustling year for the real estate sector in the Gulf Cooperation Council (GCC), experts from CBRE have crunched the numbers to provide an in-depth overview of how the sector fared. A round up of the key findings across the main segments of residential, offices, retail, hotels, and industrial logistics.

Residential

Across all markets except for Bahrain and Khobar, the average sales price of residential property rose further, with Dubai (even touted one of the world’s hottest) and Abu Dhabi the standout markets.

Average Sales Prices, US$ per Square Metre YoY % Change, 2022

In 2022, the UAE was the only residential market to record price growth and transaction volume growth across all cities and sectors. In 2023, both Dubai and Abu Dhabi will continue to see price growth, across both the apartment and villa segments of the market, albeit at a slower rate.

Offices

Performance in the GCC’s office market was relatively upbeat over the course of last year. Riyadh remains the region’s best performing office market, with an average occupancy rate of 99%. In Dubai, occupancy rate stood at 88%, up from 79% a year previous. In comparison, Bahrain’s occupancy rate remained flat at 74%.

Office Rents, US$ per Square Metre per Annum and YoY % Change, 2022

Retail

The GCC’s retail real estate sector has been under considerable pressure for a number of years, largely driven by excess supply and increasing levels of e-commerce penetration. The pandemic exerted even more pressures on the retail rental scene.

However, in 2022, CBRE found that the segment has been successful in weathering these challenges, and even, in some cases, returned with stronger fundamentals. In Dubai, a strong rebound saw rental prices increase by a staggering 51% per square metre, compared to 6% in Abu Dhabi and 0% in Bahrain.

Average Retail Rents, US$ per Square Metre, Per Annum and YoY % Change, 2022

Hotels

In 2022, the GCC’s hotel sector recorded increasing visitation numbers (lifted by World Cup tourism), higher average daily rates and higher revenue per available room (RevPAR).

With 2023 set to be the first year without any pandemic-related restrictions since 2019, CBRE’s researchers forecast that overall performance will surpass pre-pandemic levels. That being said, there will be headwinds for the sector to navigate, including but not limited to a slowdown in global economic growth, a strong US dollar and the materialisation of new supply. These factors will impact country and city markets by varying degrees.

Further reading: Four charts on Dubai’s hotel performance during the pandemic.

Average Industrial and Logistics Rents, US$ per Square Metre, Per Annum and YoY % Change, 2022

Industrial & Logistics

The GCC’s industrial and logistics sector over recent years has garnered a considerable level of occupier and investor interest. Yet at the same time the segment had to deal with undersupply undersupplied in terms of suitable stock, which has held back both occupier and investment activity considerably. This backdrop helped drive increasing rents in the vast majority of markets over the course of 2022.

Average Industrial and Logistics Rents, US$ per Square Metre, Per Annum and YoY % Change, 2022

Commenting on the report’s key findings, Taimur Khan, Head of Research MENA at CBRE in Dubai, said: “GCC economies and real estate markets, on the whole, are expected to continue to see performance levels remain relatively strong over the coming year, despite the weaker global economic backdrop.”

“Real estate projects and associated sectors such as the hotels and industrial logistics sectors will play a central role in the GCC’s economic diversification drive.”