Dubai Leads GCC Real Estate transactions in H1-2023

Real estate sale transactions in the GCC region in the first six months of 2023 reached $90.7 billion, up 9.9% y-o-y from $82.5 billion when compared with the corresponding period in 2022, according to Kamco Invest.

In its latest report on the GCC real estate sector, the Kuwait based consultancy firm said that Dubai’s transactions contributed 54% of the region’s total transacted value and was able to offset the decline of the other key markets such as Saudi, Qatar and Kuwait.

Real estate value transacted in Dubai increased almost 57% y-o-y in H1 of 2023 based on data from DXB Interact, mainly driven by strong pricing and demand of luxury properties in both single-family and multi-family homes, while the affordable property segment also witnessed healthy gains.

“The number of transactions in the GCC however declined by 8.4% y- o-y over H1 of 2023 to 286,610 deals, despite a jump of over 42% witnessed in Dubai’s real estate deals, as other markets such as Saudi, Qatar and Kuwait witnessed lower activity as compared to the same period in H1 of 2022,” the report noted.

Price Likely to Moderate

Going forward, Kamco Invest expects that the pace of price and rental growth across residential key markets is likely to moderate further in H2 of 2023, as typical late-cycle stabilisation is witnessed, and supply calibrates to more normalised demand.

“Further, the trajectory of mortgage rates and rental affordability should impact end user ownership trends especially in markets such as UAE & Saudi Arabia and determine the future course of residential transaction activity, in our view,” the consultancy said in the report.

Nevertheless, the average value per transaction achieved over H1-2023 for GCC real estate was up by 20.1% y-o-y, pointing towards significant investment demand and strong pricing. The average value per transaction in GCC in H1-2023 (around$316,400) also surpassed the 2022 average (around $276,600).

However, it is hard to estimate whether GCC’s full year 2023 transacted value potentially surpasses 2022 estimates, as it will depend on key markets such as Saudi, Kuwait and Qatar witnessing higher transaction volumes and transacted value in H2-2023 and the UAE markets, mainly Dubai, keeping the current pace of H1 of 2023 transaction activity.

In Dubai, off-plan transactions continued their momentum with off-plan volumes jumping by over 73% y-o-y in the first six months, while registering a healthy 7.1% increase in average off-plan value per transaction from end 2022.

Separately in Saudi Arabia, mortgage activity continued to trend downwards due to higher mortgage rates and higher pricing of residential products.

Going forward, the consultancy expects the pace of price across key residential markets to moderate further in H2 of 2023, as typical late-cycle stabilisation is witnessed and supply calibrates to more normalised demand, while investors and end users should remain cautious about higher interest rates and affordability.

“The trajectory of mortgage rates and rental affordability should impact end user ownership trends especially in markets such as UAE & Saudi Arabia and determine the future course of residential transaction activity, in our view,” the report said.