Saudi Arabia and the UAE lead the construction industry in the Middle East with a combined $1.36 trillion in projects under construction. The figures suggest a continued boom in Middle East real estate despite global economic headwinds. CBRE expects a positive outlook for Middle East real estate in 2023, as higher oil prices and firm economic growth are expected to support strong levels of tenant and investment activity.

Real estate growth in Saudi and UAE

CBRE expects the economies of the GCC countries to continue their relatively strong growth rates in 2023. Both hydrocarbon and non-hydrocarbon sectors have seen a strong recovery over the past year, with economic growth in the GCC region significantly outpacing the global average in 2022.

During this period, the average economic growth rate of the GCC countries was 6.3%. Their GDP growth rate is projected to be 2.7% as we move into 2023. This economic backdrop is expected to continue to provide the support regional economies need to achieve their economic diversification goals. Real estate projects and related sectors, such as hospitality and industrial, logistics and manufacturing, will play a central role in this diversification drive. The total value of real estate projects currently planned or under construction is estimated at $1.36 trillion.

Taimur Khan, head of Middle East and North Africa research at CBRE Dubai, said despite the weak global economic backdrop, GCC economies and real estate markets in general are expected to continue to perform at relatively strong levels in the year ahead.

In Dubai and Riyadh, the region's key office markets, available supply is constrained and we expect rental growth to continue. In other markets, the combination of low demand and oversupply will mean rental growth is likely to remain anemic.

Residential markets in the region are likely to see some fragmented performance in 2023, with oversupply in certain markets dragging down performance, while undersupply in key business centers such as Dubai and Riyadh could mean these markets will outperform.Editor/XingWentao