Day: August 30, 2023

Despite global macroeconomic headwinds, the UAE’s non-oil economy expanded strongly in the first half of the year, which helped the country’s real estate market perform well across all sectors.

According to consultant CBRE’s most recent market report, average prices in Dubai’s market increased by 16.9% in the year to June 2023, while the residential market in Abu Dhabi registered 4,737 sales transactions in the first half of the year, up 88.6% yearly.

The hospitality industry was supported by UAE hotels, which saw an increase in average occupancy rates of 4.1 percentage points during the first half of the year.

Despite what appears to be diminishing global financial challenges, the outlook is still generally favorable, according to the UAE Real Estate.

The impact of rising interest rates, the effect on consumers as a result of rising property costs, particularly in Dubai, and lastly the overall effect of a falling US currency are the main downside risks that we are keeping an eye on.
The second-largest economy in the Arab world, the UAE, increased 7.9% last year, the most in 11 years, following growth of 4.4% in 2021. This growth was aided by the non-oil sector as the nation advanced its diversification policy.

According to the UAE Central Bank, its GDP is projected to increase by 3.3% this year, with the non-oil sector rising by 4.5%.

The non-oil private sector’s business activity grew as new order growth reached a four-year high in june.

From 55.5 in May to 56.9 in June, the seasonally adjusted S&P Global purchasing managers’ index reading increased. This was significantly higher than the neutral 50-point line separating growth from contraction.

Every one of the previous 31 survey periods has seen an improvement in the non-oil private sector’s health.

The government’s measures, such as residency permits for retirees and remote employees, have helped the country’s real estate market recover quickly from the downturn brought on by the coronavirus.

The expansion of the 10-year golden visa program, the financial benefits of Expo 2020 Dubai, and increased oil prices all contributed to the sector’s expansion.

Rise of the residential market
According to CBRE, average villa prices rose by 15.1%, while average apartment prices jumped by 17.2% during the course of the year in Dubai’s residential sector.

According to the report, the average price of an apartment in June was Dh1,294 per square foot, while the average price of a villa was Dh1,525 per square foot.

The survey revealed that while average villa prices are already 5.5% over this peak and some areas have long beyond 2014 levels, average apartment sales rates are still 13.1% behind the highs records of 2014.

The study stated that the number of transactions in the first half of the year was 57,738, which was the “highest total over this period on record” and represented a rise of 43.2% annually.

A total of 16,499 residential units were finished and delivered in the first two quarters of 2023, with Downtown Dubai, Dubai Creek Harbour, and Business Bay accounting for 44.6% of this current supply.

Although part of the stock may not be delivered as scheduled, an additional 45,380 units are anticipated to be finished by the end of this year, according to CBRE.

In contrast, rents were stable for the fifth month in a row in June as tenants decided to extend their current leases.

According to CBRE, average apartment and villa prices in Abu Dhabi’s residential market increased by 0.9% and 1.7%, respectively, year over year in the second quarter.

When only transactions from the second quarter were taken into account, the average price for an apartment was Dh14,873 and the average price for a villa was Dh11,232.

According to the research, the market saw 4,737 sales transactions in the first half of the year, a growth of 88.6% yearly, supported by a rise in off-plan market sales of 151.1% and a rise in secondary market sales of 10.5%.

At the halfway point of the year, 1,265 units have been finished in Abu Dhabi, with 65.8% of this supply going to Al Raha.

Over the final two quarters of the year, an additional 4,538 units are anticipated to be finished, with Al Maryah Island set to get 49% of this new supply. The average rent for apartments in Abu Dhabi grew modestly by 0.1% in the second quarter, while the average rent for villas increased by 1%.

According to registrations for rentals in the second quarter, the average rent for apartments was Dh66,259 and the average rent for villas was Dh166,248.

Tourism boom supports the hospitality industry

According to the survey, the reopening of the European travel market is now helping the UAE’s hospitality sector.

According to CBRE, travelers are being enticed to arrange a stopover in the nation, which is boosting demand and profitability during the traditionally slow summer season.

According to CBRE, the average hotel occupancy rate in the UAE improved by 4.1 percentage points in the year to June, while the average income per available room—a crucial indicator of the hotel industry’s performance—rose by 3.6% annually.

According to the report, the industry is anticipated to keep expanding throughout the year as a result of a number of significant upcoming events, including the Cop 28 summit, the Abu Dhabi F1 Grand Prix, and the steady restoration of important supply markets that reopened after the pandemic.

According to CBRE, the nation’s commercial, industrial, and retail real estate sectors all saw growth in the first half of the year.

Despite ongoing global economic challenges, the Middle East’s tourism industry has experienced the strongest post-pandemic recovery worldwide, according to HSBC.

According to the bank’s latest Jet, set, go! research study, the area, which is home to the largest Arab economy in Saudi Arabia and the global commercial and leisure center of the UAE, is exceptional in that it saw a “total recovery” in terms of visitor arrivals in the first quarter of 2023.

In comparison to the same period last year, the number of visitors increased by 15% in the first three months of this year.

The Middle East’s tourism industry recovered to a much greater extent than Europe, which came in second place and saw 90% of global visitors.

Top international tourist destinations including Saudi Arabia, the UAE, Qatar, and Turkey saw large increases in tourist spending.

“The Middle East region experienced the strongest growth in terms of rebound in tourism and is the first region in the world that has grown beyond pre-pandemic numbers,” said Maitreyi Das, an economist at HSBC Securities and Capital Markets who prepared the research.

According to the first quarter of 2023, “Qatar and Saudi Arabia are the best growing tourist destinations globally.”

One of the key pillars of Middle Eastern countries, particularly the six-member economic bloc of the GCC, that are attempting to diversify their economies away from oil is the development and expansion of the tourist sector.

In order to reach its goal of 100 million visitors annually by 2030, Saudi Arabia is investing billions of dollars in the growth of its tourism industry.

Asfar, the Saudi tourist Investment Company, was established in July to aid in the expansion of the travel and tourist industry by the kingdom’s sovereign fund, the Public Investment Fund.

According to a statement released at the time by the PIF, Asfar would invest in new tourism initiatives and create tourist hotspots around Saudi Arabia with hospitality, attractions, shopping, and food and beverage options.

The PIF-owned AlUla Development Company began operations earlier this year with the goal of making the city a popular travel destination on a worldwide scale.

A fully owned subsidiary of the PIF, Saudi Entertainment Ventures (Seven), said in November that it intended to invest 50 billion Saudi riyals ($13.3 billion) to build 21 integrated entertainment destinations across 14 Saudi cities.

The second-largest economy in the Arab world, the UAE, is making significant investments to grow its tourism industry.

The vice president and ruler of Dubai, Sheikh Mohammed bin Rashid, said in May that Dubai had the greatest visitor expenditure in the region, at Dh121 billion ($33 billion), up 70% from the previous year.

We have set a goal of welcoming 40 million visitors within the next seven years, and we want the tourism industry to contribute Dh450 billion more to our GDP than it does currently.

According to HSBC, the Middle East has the highest percentage of global GDP derived from tourism, at 5%, indicating that “the region may benefit from the ongoing recovery in the year ahead.”

It said, “Asia Pacific is second, with more than 4% of the region’s GDP coming from tourism.

Additionally, international tourism receipts increased to $1 trillion last year, up 50% from the level recorded in 2021.

Comparing each region’s recovery, Europe experienced the most dramatic improvement (87% of pre-pandemic levels), followed by Africa (75%), the Middle East (70%) and the Americas (68%).

“Asia destinations earned about 28% of pre-pandemic revenues last year due to prolonged border shutdowns, likely to be up sharply in 2023,” HSBC added.

Turkey ranked fourth globally among regional travel destinations last year, with tourism receipts exceeding (by 104%) those from before the pandemic.

The rate at which air traffic seat capacity has expanded is one of the elements determining how quickly the tourism industry recovers, according to the HSBC report.

According to perceptions, 40% of individuals believe that the Middle East has already seen a tourism revival, while 20% believe that this will happen by the end of 2023.

As the company tries to get “more exposure” to Emirates and flydubai airlines, bond sales and increased stock are anticipated to fuel company growth.
Through the issuance of dollar-denominated bonds and increased owner equity, AviLease, a plane lessor controlled by Saudi Arabia’s Public Investment Fund, is on course to more than triple its expansion to $20 billion by 2030.

According to AviLease’s CEO Edward O’Byrne, the sovereign wealth fund section intends to grow at a $3 billion per year rate, with bond issuances ranging from $1.5 billion to $2 billion.

According to Mr. O’Byrne in the interview on Wednesday, the Riyadh-based company anticipates receiving an investment-grade credit rating by the end of 2024.

“Over the next ten years, Saudi Arabia is expected to experience growth on a truly remarkable scale. We’re talking about more than doubling cargo volume and tripling passenger travel, he said.

We are considering allocating the additional equity that PIF has committed to the balance sheet over the course of the next seven years.

This week, AviLease announced that it would pay $3.6 billion to acquire Standard Chartered’s aviation finance division.

The Saudi firm will purchase a portfolio of 100 narrow-body planes and take on the role of service provider for an additional 22. 167 aircraft will be owned and operated by the merged platform.

After the acquisition is complete, the PIF-backed company will emerge with a balance sheet of $6 billion and 167 aircraft, with plans to grow to $20 billion and 300 aircraft by 2030, according to Mr. O’Byrne.

According to Mr. O’Byrne, AviLease will “have a lot of capacity” to purchase wide-body aircraft following the acquisition of the narrow-body jet portfolio.

new airline company To handle long-haul flights, Riyadh Air, which is also supported by the PIF, ordered 39 Boeing 787 wide-body aircraft with options for 33 more.

After beginning operations in early 2025, Riyadh Air is expanding its fleet of aircraft in order to reach 100 destinations by 2030.

In Saudi Arabia, wide-body expansion will continue, although daily bids on wide-body assets are made on the international market, according to Mr. O’Byrne.

According to him, AviLease is frequently in communication with operators in the area and aims to increase its customer base of airlines to 100 from the present 47.

We aim to develop the Middle East as an aviation center since we are friendly neighbors. We are aware of flydubai, and we want to learn more about it and Emirates, the man added.

AviLease, established in June 2022, is a PIF initiative to expand the aviation industry in the kingdom.

As part of its Vision 2030 economic diversification plan, Saudi Arabia wants to increase the number of tourists it receives and improve its aviation industry.

According to the Saudi Aviation Strategy, actions must be taken to increase the number of destinations from 99 to 250 and to triple the annual passenger volume to 330 million by 2030.

$100 billion in investments from the public and commercial sectors support this goal.