Investment income in UAE real estate expected to remain at current levels in 2024

Investment income in UAE real estate expected to remain at current levels in 2024

A recent forecast on the Middle East real estate market published by CBRE indicates that the investment yield in UAE residential property will remain at 7–7.5% in 2024. The yield for luxury residential real estate is likely to reach 6–7%. Office yields are expected to be at 6.5–7% for the luxury class and 7–7.5% for Class A offices. The total value of real estate currently planned for development or already under construction is $409 billion, accounting for 24.4% of the total SSA Gulf region.

The UAE residential real estate market saw significant price growth and transaction volumes in 2023. Abu Dhabi is expected to continue its steady growth in transaction volumes in 2024, especially in the premium segment of the market. An increase in the supply of luxury real estate is anticipated. Meanwhile, in Dubai, housing transaction volumes may decrease slightly. Price growth for apartments and villas will continue, although the pace of this growth may slow down by the second half of the year.

Dubai's office market is expected to maintain high tenant activity. Class A and luxury offices will continue to demonstrate the best performance in the segment due to a supply shortage amid intensifying demand. Overall rental rates in the city will continue to rise in both the commercial and residential sectors, although at a slower pace compared to the previous year.

Retail property rental rates in Abu Dhabi and Dubai increased by 10.7% and 17.6% respectively in 2023. Demand for such offerings remains high in both emirates. Both also experience a serious shortage of new and high-quality offerings in the market. This will lead to a decrease in tenant activity, although demand indicators will remain positive. Rental rates in the segment will also slow their growth by the second half of the year.

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