Gulf Real Estate Outlook 2025: Growth and Opportunities in UAE, Saudi Arabia, and Kuwait
The real estate markets in the United Arab Emirates (UAE), Saudi Arabia, and Kuwait are poised for significant growth in 2025, driven by strong economic fundamentals, supportive government policies, and increasing investor interest. This article delves into the factors contributing to this optimistic outlook and what investors can anticipate in the coming year.
United Arab Emirates (UAE): Sustained Expansion Across Sectors
The UAE’s real estate sector is set to continue its upward trajectory into 2025, bolstered by robust demand in residential, commercial, and hospitality segments. Government initiatives, such as the revised Golden Visa requirements enhancing investor eligibility, have played a pivotal role in attracting international investors. In the first quarter of 2024, residential property prices in Dubai and Abu Dhabi saw impressive annual gains of 18.3% and 8.6%, respectively, reinforcing the UAE’s position as a competitive luxury housing market globally.
The office space segment has also experienced rent increases due to high demand, particularly for premium properties. The hospitality sector thrives, supported by a surge in tourism and business travel, contributing to robust performance in hotel average daily rates across major cities. Looking ahead, the UAE’s real estate market is expected to maintain its growth trajectory, with a slight moderation in certain segments and areas like Abu Dhabi. The market’s resilience indicates a well-supported economic environment and proactive policy measures ensuring sustained growth and investment appeal
Saudi Arabia: Accelerated Growth Amid Economic Diversification
Saudi Arabia’s real estate market is set to experience significant growth in 2025, driven by activities in both the oil and non-oil sectors. The International Monetary Fund (IMF) anticipates the country’s real GDP to climb to 2.6% in 2024, with an optimistic projection of 8.1% growth in 2025. This economic recovery is mirrored in the real estate domain, where the General Authority for Statistics reports a 0.6% rise in the real estate price index for the first quarter of 2024, led by a 1.2% increase in residential land prices.
Major cities like Riyadh, Jeddah, and Dammam have seen substantial year-over-year increases in residential sales transactions during the first quarter of 2024. The office sector has strengthened with rising rents in high-end and mid-range properties, partly driven by the new regional headquarters initiative, a component of Saudi Arabia’s Vision 2030. The hospitality sector also displays healthy growth, supported by a rise in business travel, religious tourism from Hajj and Umrah pilgrimages, and a vibrant slate of international and cultural events. Despite challenges posed by high interest rates, the outlook for Saudi Arabia’s real estate market remains positive, with strong performance expected to continue into the latter half of 2024 due to solid non-oil sector activities and significant government spending on infrastructure.
Kuwait: Resilience Amid Economic Challenges
Kuwait’s real estate sector demonstrates resilience and potential for growth amidst challenging economic conditions. Despite a projected GDP contraction of 1.4% for 2024, the non-oil sectors, especially real estate, are experiencing growth supported by an expected 2.0% increase in non-oil GDP. Enhanced project activities and anticipated business reforms drive this growth. The real estate market is witnessing a revival with increasing rents and land prices, particularly notable in the Istithmari segment, where apartment land prices have shown significant year-over-year gains across most areas.
Commercial sector land prices have also seen increases across all governorates, and rental rates for 3-bedroom and 60 sq m apartments have remained stable with an uptick compared to the end of 2022. The market’s momentum is expected to accelerate in the second half of 2024, supported by strategic government reforms and positive market sentiment. Additionally, inflation is expected to ease, with the Consumer Price Index moderating to 3.17% year-on-year by April 2024
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Kuwait: A Rising Economic Powerhouse Amidst Diversification Efforts
