The Middle East’s core markets are performing well, despite wider regional tensions. Non-oil projects in Saudi Arabia and the UAE continue to gather momentum, while Egypt’s real estate market has overcome economic challenges to demonstrate robust growth.
Migration fuelling growth in UAE
Population growth and an influx of ultra high net worth (UHNW) individuals and family offices to the UAE are underpinning strong demand for residential property, particularly in the prime markets. Supply constraints in some markets are set to continue into 2025, putting upward pressure on both capital and rental values.
However, development activity is high in Dubai and Abu Dhabi, with significant supply expected to be delivered towards the end of 2025. This should dampen the aggressive price growth seen in 2024, which will be welcome news for tenants.
The office market in Dubai is facing some supply constraints, however, particularly for Grade A stock. With vacancy rates of less than 5% across prime locations and Grade A developments in 2024, prime rents grew by 9%. We anticipate cooling in certain markets in 2025, given the strong supply pipeline of approximately 1 million square feet of stock.
High living standards attract corporates to Abu Dhabi
Abu Dhabi recently overtook Oslo as the city with the greatest concentration of sovereign wealth capital in the world. This, combined with its attractive low-tax environment, open attitude towards expats and high standard of living makes it attractive not just to UHNW individuals but also corporate entities. As a result, the city’s financial centre, Abu Dhabi Global Market (ADGM) is considered a leading Middle East value proposition.
The ongoing development of the Wynn Al Marjan Island Resort and Casino in Ras Al Khaimah has bolstered confidence in the city and driven neighbouring launches of luxury hotel and residential properties. We expect further development on Al Marjan Island ahead of the Wynn Resort’s planned opening in early 2027.
Ambitious Saudi real estate projects gain momentum
The Kingdom of Saudi Arabia is entering into 2025 with positive momentum, driven by various international factors and hosting rights of world events like Expo 2030 and Football World 2034. These are likely to expand the real estate offering of a few giga-projects that will contribute by adding stadiums or infrastructure for the overall ‘Saudi’ brand for its international visitors.
Saudi Vision 2030 has laid the platform for various giga-projects and we saw a few of those already materialising and showcasing tangible growth in the past 12 to 15 months. While NEOM Sindalah opened doors for visitors, Diriyah Gate in Riyadh has had multiple launches of its signature and prime residences for sale in Riyadh.
Riyadh is the economic hub and the capital city with the largest population base in the country – so a large focus will now be to enhance the overall real estate landscape by adding international quality projects and infrastructure. Sports Boulevard (among the others) is a 135km long linear development that aims to cater towards the lifestyle, quality real estate, and wellness program through its offering.
Jeddah, on the other hand, continues to attract attention as well. Various large giga-projects and infrastructure developments are in the pipeline and are expected to be announced in the coming short- to medium-term.
Partnerships key to Egyptian growth
In 2024, Egypt’s real estate market demonstrated robust growth despite economic challenges including currency depreciation, rising inflation and higher construction costs. The North Coast saw a sales surge following two key deals. In February, ADQ, the Abu Dhabi Developmental Holding Company wholly owned by the government of Abu Dhabi signed a partnership deal with the Cairo government to develop the Ras El Hekma area. Meanwhile, the South Med project by TMG in El Dabaa has attracted EGP 280 billion ($5.5 million) in sales and reservations from local and regional buyers.
In Greater Cairo, residential property prices rose sharply – by more than 90% in some prime developments. Devaluation of the Egyptian pound has made properties more attractive to international investors and provided a hedge against inflation for locals. That said, rising inflation is straining buyers’ purchasing power and may slow sales velocity in the short to medium term.
Grade A office developments in Egypt performed well, with sales prices up 61% and rental rates rising 54%. However, the expected influx of new Grade A office supply may impact occupancy rates and rental yields are being squeezed by rising costs and competition.
To support developers, the government has extended development timelines by 20%. It has also introduced measures such as direct land allocation, reduced reservation fees and deferred instalments.
Despite challenges, the top 10 developers in Egypt recorded remarkable sales of EGP 1 trillion ($19.8 billion) up 203% on 2023, according to The Board Consulting – highlighting the market’s resilience and investment appeal.
