Real estate market in KSA and Dubai poised for positive growth in 2023: Deloitte
RIYADH: Saudi Arabia’s real estate market is set for positive growth in 2023, with tourism sector’s post-pandemic recovery a key indicator within the hospitality sector, revealed the latest report by global consultancy firm Deloitte.
Reflecting the upbeat mood in the real estate market, Deloitte’s ninth annual Middle East Real Estate Predictions 2023 report predicts an increase in hotel occupancy and average daily rates compared to the previous year.
The report noted that Saudi Arabia’s significant GDP growth is making it one of the most attractive global destinations for investors.
“As global economies fully reopen following the pandemic, we predict continued growth in the Saudi Arabian real estate market until 2023,” said Stephen Birch, partner and head of real estate at Deloitte Middle East.
He added: “While 2022 saw record levels of demand for commercial office space as a result of ‘Program HQ’, 2023 is set to see a continued focus on the delivery and tourism of high-quality residential-based mixed-use schemes.” , leisure and entertainment projects.
Among key findings, the report also provides a positive outlook for Dubai’s real estate market this year.
Oliver Morgan, partner and head of development in Deloitte’s real estate team in the Middle East, said: “In Saudi Arabia, all residential areas remain in high demand. Riyadh and Dubai remain attractive commercial markets as businesses seek growth away from the Far East and Europe.
Saudi Arabia’s real estate performance
Saudi Arabia’s GDP to grow by 8.6 percent in the third quarter of 2022. According to the World Bank, it is expected to grow by 8.3 percent in the fourth quarter of 2022, up from 3.7 percent and 2.3 percent in 2023 and 2024, respectively.
The post-COVID recovery of the real estate sector is led by rising tourist demand and government spending on infrastructure projects such as the expansion of Riyadh airport.
The first three months of the year were the strongest for occupancy performance in Riyadh, reaching 76 percent in March. Meanwhile, hotels in Jeddah recorded the highest ever occupancy performance of 59 per cent in May.
Sales prices of villas and apartments have increased during the first nine months of 2022 compared to 2021, and demand for apartments from Saudi citizens remains strong.
Employment forecasts from Oxford Economics indicate that the financial and business services segment in the Kingdom is set to record 12 per cent year-on-year growth.
The Economist Intelligence Unit forecasts total retail sales volume in the Kingdom to increase by about 4 percent in 2022, with sales expected to increase by an average of 2 percent between 2023 and 2026.
Dubai real estate performance
The post-pandemic recovery of the real estate sector in Dubai was fueled by pent-up demand from travelers and increased spending by residents, the report said, but adding that inflation remains a concern for consumers and could impact sentiment in 2023. expected to do.
The year-on-year November 2022 average for Dubai stood at 72 per cent, compared to 63 per cent for the same period in 2021, while the average daily hotel room rate for the period increased by 22 per cent year-on-year to 674 Is. dirham ($183.5).
The report states that between 2021 and 2022, the average sale prices of residential properties in Dubai are expected to increase by about 10 per cent. The average rent has also increased by about 21 per cent during the same period.
Office rents are set to reach pre-pandemic levels, registering a year-on-year growth of 12 per cent in September 2022 as compared to the same period last year.
The EIU forecasts total UAE retail sales volume to increase by approximately 4.2 percent in 2022, while sales are expected to increase by an average of 3.9 percent between 2023 and 2026.