According to data from authoritative institutions such as the International Monetary Fund, World Bank, and OECD, the UAE's real GDP growth for 2023 is projected to be between 3.5% and 3.8%. Although a decline from the 7.8% growth in 2022, it still far surpasses other developed economies, making the UAE one of the globally recognized high-growth economies.

Even more surprising is that the growth rate of the UAE's real estate market in 2023 exceeded its GDP growth. According to statistics from the International Monetary Fund, the UAE ranked first globally in terms of real estate price growth, reaching 10.39%. This figure is 2.2 times higher than Mexico's growth rate, setting the pace globally.

Let's first look at Dubai, a city striving to become one of the top four financial centers globally, which has attracted global investors' attention since the pandemic. According to statistics from various real estate consulting companies and departments, Dubai's real estate market saw an annual growth rate ranging from 18% to 21%, with the most reliable median being 19%.

Apartment prices surged over 18%, while villas saw increases exceeding 22%. Rental rates increased between 23% and 28%, with the most reliable median at 24%. Areas like Dubai Creek Harbour, Emirates Hills, and Jumeirah Palm Island experienced the fastest growth rates, reaching up to 30%. Some luxury properties even saw increases of up to 35.6%.

Dubai's real estate transactions exceeded 120,000, with the highest recorded figure being 133,000, a year-on-year increase of 37% to 38%. Dubai's total real estate sales amounted to a staggering AED 411.7 billion, a 55% increase from 2022. Of these transactions, 52% in volume and 66% in value were off-plan sales, while 48% in volume and 35% in value were ready properties.

Interestingly, the total amount of real estate mortgages decreased by about 8%, indicating a growing preference among global investors for cash transactions, accounting for over 80% of total transactions. In 2023, the primary investor clients came from the UK and India, replacing Russian clients, who topped the list in 2022, indicating that Europe and South Asia remain the primary sources of investment in Dubai.

As the capital of the UAE, Abu Dhabi has become a new favorite for top hedge funds and investment institutions since 2021. 2023 marked the fourth year of Abu Dhabi's real estate market being open to foreign transactions, witnessing a robust growth. Abu Dhabi's overall property prices rose by approximately 8.3%, with luxury apartments and villas seeing increases of up to 13%.

Abu Dhabi's total real estate transactions reached AED 44 billion, a 120% increase from 2022, surpassing Dubai in transaction volume growth. Of these, 81% in value and 76% in volume were off-plan transactions, with off-plan transaction values soaring by 174% compared to 2022. This demonstrates the continuous rise in cash transactions in the UAE market.

Abu Dhabi saw a 75% increase in the number of transactions to 13,298, compared to 7,957 transactions in 2022. Saadiyat Island emerged as the most popular area for villa investments, while Al Reem Island and Yas Island dominated apartment investments.

Annual rental yields ranged from 6.57% to 9.63%. Quarterly average rental increases for Saadiyat Island villas were 3.2%, while average quarterly increases for apartments on Yas Island exceeded 6%. Abu Dhabi's overall residential occupancy rate reached 85.1%. Commercially, Yas Mall boasted a 99% occupancy rate, while Aldar's commercial properties averaged over 93% occupancy. This indicates strong market demand for both residential and commercial properties in Abu Dhabi.

Although the UAE real estate market shows strong performance, investors need to carefully analyze market conditions and risks before further investment, making wise decisions. For global investors, understanding the characteristics and trends of the UAE market and seeking professional advice will help achieve optimal asset allocation and wealth management.

Knightsbridge & Partners will continue to actively research and understand the local market, providing professional advice to investors to seize growth opportunities in the UAE market. We welcome visionary investors to collaborate with KP Group to jointly focus on the development of the UAE market.