Despite macroeconomic volatility affecting the global real estate landscape, the UAE saw strong momentum in the final quarter of 2022, boding well for a steady pipeline of growth in 2023, says real estate expert JLL.

Against the same backdrop, JLL's UAE 2022 Review report provides a rear-view mirror view of 2022, while highlighting the year's opportunities.

Last year saw continued strong growth in residential transaction activity in Dubai. Data from Dubai Pulse further suggests that the emirate saw a 51% increase in transaction volumes between January and November, while transaction values rose by 55%.

Anecdotal evidence suggests that this jump is largely attributable to a surge in demand from foreign buyers, the report notes.

Faraz Ahmed, deputy manager of research at JLL Mena, said." 2022 is a year of continued growth for the UAE's real estate sector as it continues to gather pace while benefiting from the country's reliable economic policies, excellent infrastructure, safe haven status and innate ability to adapt to new trends."

"Even sectors like retail, which initially faced headwinds during the year, recovered significantly in the final quarter. Looking ahead, we can expect the UAE to continue to attract the attention of regional and international investors with aspirational offerings in the sector," Ahmed noted.

In addition, the delivery of 38,000 residential units last year brought the total supply in Dubai to 680,000 units, while in Abu Dhabi, the delivery of some 6,000 units brought the capital's residential stock to 279,000 units.

In 2023, planned completions will be slightly higher in Dubai (41,000 units) compared to 6,000 units in the capital.

On an annual basis, average residential sales prices increased by 10% in Dubai and 3% in Abu Dhabi in the fourth quarter of 2022.The JLL report said that while rents in Dubai increased by 27% over the same period, they remained largely flat in the capital.

The report said that the outstanding performance of the residential sector once again reflected Dubai's relative safe-haven status against a backdrop of geopolitical and economic challenges prevailing in the world.

According to JLL, the sector saw a significant turnaround last year following a prolonged period of low office rents in Dubai.

The combination of strong business conditions and a limited supply of quality office space largely resulted in double-digit growth in rental values, lifting them to pre-2015 levels.

In the fourth quarter of 2022, Grade A office rents in the Dubai CBD increased by 21% year-on-year to an average of AED 2,100 per square metre per annum. Meanwhile, JLL said in its report that healthy leasing activity in Abu Dhabi largely supported the 8% annual growth in Grade A rents to AED 1,790 per square metre per annum.

In addition, growing office demand and a shortage of newly completed office space has led to lower availability in both cities. In the last quarter, vacancy rates in Dubai and Abu Dhabi fell to 11 per cent and 23 per cent respectively, it said.

The technology, finance, defence and other professional services sectors accounted for a large share of enquiries last year. The sector also witnessed a steady influx of new entrants, pushing up total occupier demand and resulting in landlords offering fewer incentives, it added.

In addition, the scarcity of well-managed Grade A office space has led occupiers to consider less expensive buildings and locations, providing an opportunity for owners of Grade B assets to capture the "spillover effect" of demand for premium floor space by upgrading existing space.

Overall, Dubai's office space stock increased by 30,000 sq m to 9.1 million sq m in 2022, while Abu Dhabi added around 8,000 sq m, bringing the capital's total stock to 3.9 million sq m. In 2023, almost 100,000 sq m and over 35,000 sq m of office space are expected to be delivered in Dubai and Abu Dhabi respectively.

According to JLL, the continued rise in online shopping has led retailers to strengthen their digital presence in order to further boost revenues in an increasingly competitive environment.

While market participants last year highlighted clogged supply chains and inflationary pressures as major headwinds, there were signs of relief in the second half of the year.

Some 200,000 square metres of retail floor space delivered last year increased Dubai's total stock to 4.63 million square metres, with some 355,000 square metres of space scheduled for delivery citywide in 2023 - a new super-regional mall and the expansion of two existing malls of the same type will account for the bulk of this.

In the capital, however, retail stock remains unchanged at 2.89 million sqm in 2022, but is expected to increase by 232,000 sqm this year.

After trending down in recent years, rents in both cities have broadly stabilised. In the fourth quarter, the average rental value of primary and secondary malls in Abu Dhabi was unchanged compared to the same period in 2021, while rents in Dubai fell by 1%.

However, it is worth noting that super regional malls in prime locations benefited from returning visitors, leading to rental growth in this segment. Average rents for super-regional malls in Dubai increased by 3% year-on-year in the last quarter of 2022 compared to the fourth quarter of 2021.

Overall, in order to differentiate their offerings, owners and concessionaires remain focused on bringing unique entertainment concepts to drive footfall. More importantly, landlords have been offering favourable lease terms and incentives to attract new international brands, particularly in the F&B sector.