RIYADH: Driven by elevated oil prices and resolute economic growth, the Middle East real estate market will remain strong in 2023, predicts CBRE in its latest report. According to the US-based commercial real estate services and investment firm, both the hydrocarbon and non-hydrocarbon sectors have seen strong rates of recovery over the course of the last year, with economic growth in the Gulf Cooperation Council region noticeably outpacing the global average during 2022. Over this period, GCC countries recorded an average growth rate of 6.3 percent and as one moves into 2023, their gross domestic product growth is expected to reach 2.7 percent, it said. The total value of real estate projects currently planned or under construction currently stands at an estimated $1.36 trillion. Saudi Arabia accounts for 64.5 percent of this total or some $877 billion, followed by the UAE, which at $293 billion, accounts for 21.6 percent of the total. Bahrain, Kuwait, Oman and Qatar share 1.7 percent, 4.4 percent, 4.6 percent and 3.3 percent respectively. While this level of investment in real estate is a core part of a number of countries’ diversification strategies, the continued development and easing of regulations will be crucial in supporting these initiatives, the report said. “GCC economies and real estate markets, on the whole, are expected to continue to see performance levels remain relatively strong over the coming year, despite the weaker global economic backdrop,” said Taimur Khan, head of research for Middle East and North Africa at CBRE in Dubai. He added: “In the region’s key office markets, Dubai and Riyadh, with available supply being constrained, we expect rental rates to continue to grow. In other markets, a combination of subdued demand and excess supply will mean rental growth is likely to remain anemic.” Performance in the GCC’s office market was relatively upbeat over the course of 2022. Occupier activity in Saudi Arabia will continue to be centered toward Riyadh, where the average occupancy rate sits at 99 percent. With a lack of existing supply and strong pre-leasing activity taking place in new projects which are not scheduled for delivery in the immediate future, CBRE expects that rental rates will continue to increase in 2023. Price performance in both the apartment and villa market segments in Saudi Arabia is forecast to become more polarized over the coming year. Villa prices are expected to continue to increase, albeit at slower rates, whereas apartment prices are likely to continue to soften. However, CBRE does not anticipate this trend occurring in Riyadh, where the rate of price growth is expected to moderate. Furthermore, the full-scale return of religious tourism in Saudi Arabia will continue to drive hotel occupancy in the two holy cities and Jeddah. More so across the Kingdom, with the materialization of luxury and ultra-luxury developments, one is also likely to see an uptick in average daily rates.