Dubai Marina is popular with both buyers and those looking for a place to rent. Razan Alzayani / The National
Dubai Marina is popular with both buyers and those looking for a place to rent. Razan Alzayani / The National
Dubai Marina is popular with both buyers and those looking for a place to rent. Razan Alzayani / The National
Dubai Marina is popular with both buyers and those looking for a place to rent. Razan Alzayani / The National

Business

Property

How will Dubai and Abu Dhabi property markets perform in 2023?

Prices and rents soared in Dubai in 2022, but will the momentum continue into the new year?

Ian Oxborrow
Ian Oxborrow

December 28, 2022

  • English
  • Arabic

The UAE property market, and Dubai's in particular, has experienced quite a year.

Records tumbled with regularity as prices and transactions soared amid a strong economic recovery from the Covid-19 pandemic, plus the hosting of Expo 2020 Dubai and the nearby 2022 Fifa World Cup.

Despite global economic headwinds, high-net-worth individuals have flocked to the UAE in the past 18 months, which has given impetus to the luxury market. The number is expected to rise by 22 per cent in the next five years, according to Savills.

Prices in Dubai's prime sector are likely to end the year about 50 per cent higher than 2021, Knight Frank said, as a lack of high-end supply failed to match demand.

Dubai's real estate market is set for a record-breaking year in 2022 after registering 88,028 sales transactions as of November 2022, up from 60,258 transactions in 2021, according to Property Finder. This represents a significant increase of 46 per cent and surpasses the market peak in 2013 by 38 per cent.

Knight Frank forecasts the city to have the highest prime price growth in the world in 2023, ahead of the likes of Miami and Paris.

“We believe that the luxury supply chain in 2023 is going to be limited to approximately 300 to 400 units,” said George Azar, chief executive of Luxhabitat Sotheby's International Realty.

“And we believe that within that market, the demand for this price point will remain quite strong.

“In terms of transactions, we will need to manage sellers’ or developers’ pricing expectations because it is not that there are less buyers, but the sellers are seeking to achieve a very high price point; sometimes for more money than the property is worth.”

Among the records in 2022, was Dubai's most expensive property — a villa on The Palm Jumeirah that was sold for Dh302 million, while another villa on The Palm was rented out on a six-month basis for Dh4 million, and monthly sales totals surpassed previous highs throughout the year.

Dubai's “Billionaires' Row”, which sits on Frond G of The Palm Jumeirah, is now said to be “the most exclusive street for Dubai’s rich and famous”, according to Murat Ayyildiz, the chairman of Alpago Group, which has developed six signature villas there.

Three of the six villas have sold, the most recent of which cost Dh130 million.

Market stability has been a key factor in its performance this year, according to Mark Richards, sales director at LuxuryProperty.com.

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My Dubai Rent: Cosy studio for Dh28,000 offers this artist an escape from rising rents

  • Farida Talaat rents a studio flat for Dh28,000 a year in Damac Hills. All photos: Chris Whiteoak / The National
    Farida Talaat rents a studio flat for Dh28,000 a year in Damac Hills. All photos: Chris Whiteoak / The National
  • Ms Talaat had lived in Canada but moved to Damac Hills in Dubai to be closer to her parents.
    Ms Talaat had lived in Canada but moved to Damac Hills in Dubai to be closer to her parents.
  • There are plenty of shops and facilities close to Damac Hills.
    There are plenty of shops and facilities close to Damac Hills.
  • Ms Talaat hopes to live a sustainable life in the 410 square foot property.
    Ms Talaat hopes to live a sustainable life in the 410 square foot property.
  • Damac Hills has a combination of apartment blocks and villas.
    Damac Hills has a combination of apartment blocks and villas.
  • Budget friendly Viva supermarket helps residents keep food bills low.
    Budget friendly Viva supermarket helps residents keep food bills low.
  • This studio flat costs Dh28,000 in one cheque, excluding utilities.
    This studio flat costs Dh28,000 in one cheque, excluding utilities.
  • Ms Talaat says the small yet sunlit flat is her comfort zone.
    Ms Talaat says the small yet sunlit flat is her comfort zone.
  • Ms Talaat swapped lush green countryside in Canada for more sandy views in Dubai.
    Ms Talaat swapped lush green countryside in Canada for more sandy views in Dubai.
  • The area caters to families with small children.
    The area caters to families with small children.
  • The modest studio flat has a full bath and shower.
    The modest studio flat has a full bath and shower.
  • The flat is a blank canvas, Ms Talaat says.
    The flat is a blank canvas, Ms Talaat says.
  • Studio flat in Damac Hills, Dubai for Dh28,000 a year excluding utilities.
    Studio flat in Damac Hills, Dubai for Dh28,000 a year excluding utilities.
  • Like many residences in the UAE, Damac Hills provides a swimming pool to cool off.
    Like many residences in the UAE, Damac Hills provides a swimming pool to cool off.
  • Ms Talaat installed artificial turf on her balcony as greenery is important to her.
    Ms Talaat installed artificial turf on her balcony as greenery is important to her.

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He said the impact of rising interest rates on finance buyers has not led to a fall in overall buyer activity.

“Where prices have gone up, a different demographic of buyer is moving in,” he said.

“As for the buyers who have been priced out — they are expanding their horizons. If a four-bed home in Dubai Hills is more difficult to get a mortgage on, buyers will look to Arabian Ranches, Mudon and other communities that are a bit further out, but still tick all the right boxes in terms of home quality and community atmosphere.

“That being said, the city’s infrastructure is changing to accommodate these changes — we have seen new roads being added to facilitate access to and from these communities.”

He added that he is seeing buyers who find the market to be too expensive and opt to go for a rental instead, then realise how expensive the rental market has become, and come right back to the buying market with adjusted expectations.

Dubai's population, which crossed 3.5 million in April, is expected to continue to grow, surging to 5.8 million by 2040, bolstered by a new wave of post-pandemic immigration, experts said.

A host of visa changes have made living and working in the UAE more attractive for foreign workers and Richard Waind, group managing director at Betterhomes, expects demand in 2023 will remain healthy as the key push and pull factors driving migration to the UAE remain in place.

“War, global uncertainty and increasing tax burdens globally are likely to keep people and capital flowing into the UAE, while the UAE government will continue to innovate to attract the best talent,” Mr Waind said.

“Supply in the secondary market will remain under stress, with handovers lagging behind population growth. The supply and demand equilibrium is likely to rebalance in 2024 as the most recent wave of new launches comes to fruition.”

Mr Waind expects demand from the traditional European and Asian subcontinent markets to continue, and expects a return of Chinese investors in 2023 as the country slowly emerges from its “zero-Covid” policies and wealthy people once again look to invest overseas.

  • VILLA PRICES FROM CBRE: Palm Jumeirah: Dh3,704 per square foot — up 3.0 per cent in October, up 0.2 per cent in September, up 1.9 per cent in August, up 4.6 per cent in July, up 4.9 per cent in June, up 5 per cent a month in May, up 5 per cent in April.
    VILLA PRICES FROM CBRE: Palm Jumeirah: Dh3,704 per square foot — up 3.0 per cent in October, up 0.2 per cent in September, up 1.9 per cent in August, up 4.6 per cent in July, up 4.9 per cent in June, up 5 per cent a month in May, up 5 per cent in April.
  • Emirates Hills: Dh2,175 per square foot — down 3.6 per cent in October, up 3.8 per cent in September, no change in August, up 0.3 per cent in July, up 3.3 per cent in June, up 1.8 per cent in May, up 1.8 per cent in April. Photo: Knight Frank
    Emirates Hills: Dh2,175 per square foot — down 3.6 per cent in October, up 3.8 per cent in September, no change in August, up 0.3 per cent in July, up 3.3 per cent in June, up 1.8 per cent in May, up 1.8 per cent in April. Photo: Knight Frank
  • Jumeirah: Dh2,214 per square foot — up 3.6 per cent in October, up 2.3 per cent in September, down 1.1 per cent in August, up 2.2 per cent in July, up 1.0 per cent in June, up 2.0 per cent in May, up 3.7 per cent in April. Sarah Dea / The National
    Jumeirah: Dh2,214 per square foot — up 3.6 per cent in October, up 2.3 per cent in September, down 1.1 per cent in August, up 2.2 per cent in July, up 1.0 per cent in June, up 2.0 per cent in May, up 3.7 per cent in April. Sarah Dea / The National
  • District One: Dh2,055 per square foot — up 3.2 per cent in October, up 2.4 per cent in September, down 2.1 per cent in August, up 2.2 per cent in July, up 4.1 per cent in June, up 2.3 per cent in May, down 0.9 per cent in April. Satish Kumar / The National
    District One: Dh2,055 per square foot — up 3.2 per cent in October, up 2.4 per cent in September, down 2.1 per cent in August, up 2.2 per cent in July, up 4.1 per cent in June, up 2.3 per cent in May, down 0.9 per cent in April. Satish Kumar / The National
  • Mohammed bin Rashid City: Dh1,672 per square foot — up 0.7 per cent in October, up 0.6 per cent in September, up 1.2 per cent in August, up 3.6 per cent in July, up 4.0 per cent in June, up 0.1 per cent in May, up 0.7 per cent in April.
    Mohammed bin Rashid City: Dh1,672 per square foot — up 0.7 per cent in October, up 0.6 per cent in September, up 1.2 per cent in August, up 3.6 per cent in July, up 4.0 per cent in June, up 0.1 per cent in May, up 0.7 per cent in April.
  • Dubai Hills: Dh1,588 per square foot — up 2.3 per cent in October, up 1.0 per cent in September, up 0.9 per cent in August, down 0.2 per cent in July, up 4.1 per cent in June, up 1.2 per cent in May, up 1.5 per cent in April. Photo: Emaar Malls Management
    Dubai Hills: Dh1,588 per square foot — up 2.3 per cent in October, up 1.0 per cent in September, up 0.9 per cent in August, down 0.2 per cent in July, up 4.1 per cent in June, up 1.2 per cent in May, up 1.5 per cent in April. Photo: Emaar Malls Management
  • The Meadows: Dh1,586 per square foot — up 2.2 per cent in October, up 1.2 per cent in September, up 1.5 per cent in August, up 2.5 per cent in July, up 0.9 per cent in June, up 1.6 per cent in May, down 0.5 per cent in April. Jeffrey E Biteng / The National
    The Meadows: Dh1,586 per square foot — up 2.2 per cent in October, up 1.2 per cent in September, up 1.5 per cent in August, up 2.5 per cent in July, up 0.9 per cent in June, up 1.6 per cent in May, down 0.5 per cent in April. Jeffrey E Biteng / The National
  • The Lakes: Dh1,464 per square foot — down 1.3 per cent in October, down 1.1 per cent in September, up 1.3 per cent in August, up 1.3 per cent in July, up 1.6 per cent in June, up 1.2 per cent in May, up 1.0 per cent in April. Pawan Singh / The National
    The Lakes: Dh1,464 per square foot — down 1.3 per cent in October, down 1.1 per cent in September, up 1.3 per cent in August, up 1.3 per cent in July, up 1.6 per cent in June, up 1.2 per cent in May, up 1.0 per cent in April. Pawan Singh / The National
  • Jumeirah Islands: Dh1,563 per square foot — up 3.9 per cent in October, up 2.9 per cent in September, down 3.7 per cent in August, down 0.1 per cent in July, up 3.6 per cent in June, up 0.9 per cent in May, up 2.5 per cent in April. Photo: Prestige Dubai
    Jumeirah Islands: Dh1,563 per square foot — up 3.9 per cent in October, up 2.9 per cent in September, down 3.7 per cent in August, down 0.1 per cent in July, up 3.6 per cent in June, up 0.9 per cent in May, up 2.5 per cent in April. Photo: Prestige Dubai
  • Jumeirah Golf Estates: Dh1,474 per square foot — down 1.6 per cent in October, up 4.6 per cent in September, down 1.4 per cent in August, up 4.4 per cent in July, down 1.1 per cent in June, up 3.6 per cent in May, up 4.6 per cent in April. Pawan Singh / The National
    Jumeirah Golf Estates: Dh1,474 per square foot — down 1.6 per cent in October, up 4.6 per cent in September, down 1.4 per cent in August, up 4.4 per cent in July, down 1.1 per cent in June, up 3.6 per cent in May, up 4.6 per cent in April. Pawan Singh / The National
  • The Springs: Dh1,165 per square foot — up 0.9 per cent in October, up 1.0 per cent in September, down 0.4 per cent, up 3.9 per cent in July, up 0.8 per cent in June, up 1.8 per cent in May, up 2.1 per cent in April. Photo: Better Homes
    The Springs: Dh1,165 per square foot — up 0.9 per cent in October, up 1.0 per cent in September, down 0.4 per cent, up 3.9 per cent in July, up 0.8 per cent in June, up 1.8 per cent in May, up 2.1 per cent in April. Photo: Better Homes
  • Arabian Ranches: Dh1,235 per square foot — up 1.3 per cent in October, up 1.4 per cent in September, up 0.8 per cent in August, down 2.5 per cent in July, up 1.7 per cent in June, up 0.7 per cent in May, up 3.7 per cent in April. Pawan Singh / The National
    Arabian Ranches: Dh1,235 per square foot — up 1.3 per cent in October, up 1.4 per cent in September, up 0.8 per cent in August, down 2.5 per cent in July, up 1.7 per cent in June, up 0.7 per cent in May, up 3.7 per cent in April. Pawan Singh / The National
  • Meydan City: Dh1,199 per square foot — up 0.8 per cent in October, up 0.4 per cent in September, up 0.6 per cent in August, down 0.4 per cent in July, up 1.3 per cent in June, up 0.9 per cent in May, up 0.9 per cent in April.
    Meydan City: Dh1,199 per square foot — up 0.8 per cent in October, up 0.4 per cent in September, up 0.6 per cent in August, down 0.4 per cent in July, up 1.3 per cent in June, up 0.9 per cent in May, up 0.9 per cent in April.
  • Al Barari: Dh1,287 per square foot — up 1.0 per cent in October, up 2.9 per cent in September, up 2.2 per cent in August, up 3.5 per cent in July, up 3.0 per cent in June, down 0.7 per cent in May, up 4.9 per cent in April. Photo: Luxhabitat
    Al Barari: Dh1,287 per square foot — up 1.0 per cent in October, up 2.9 per cent in September, up 2.2 per cent in August, up 3.5 per cent in July, up 3.0 per cent in June, down 0.7 per cent in May, up 4.9 per cent in April. Photo: Luxhabitat
  • Jumeirah Park: Dh1,106 per square foot — down 2.0 per cent in October, down 1.9 per cent in September, up 0.4 per cent in August, up 0.4 per cent in July, up 3.8 per cent in June, up 0.2 per cent in May, up 0.8 per cent in April. Pawan Singh / The National
    Jumeirah Park: Dh1,106 per square foot — down 2.0 per cent in October, down 1.9 per cent in September, up 0.4 per cent in August, up 0.4 per cent in July, up 3.8 per cent in June, up 0.2 per cent in May, up 0.8 per cent in April. Pawan Singh / The National
  • Victory Heights: Dh1,139 per square foot — up 4.2 per cent in October, down 0.9 per cent in September, down 1.3 per cent in August, down 0.3 per cent in July, up 1.4 per cent in June, up 3.7 per cent in May, down 2.2 per cent in April. Photo: Luxhabitat
    Victory Heights: Dh1,139 per square foot — up 4.2 per cent in October, down 0.9 per cent in September, down 1.3 per cent in August, down 0.3 per cent in July, up 1.4 per cent in June, up 3.7 per cent in May, down 2.2 per cent in April. Photo: Luxhabitat
  • Mudon: Dh1,013 per square foot — down 0.7 per cent in October, up 2.1 per cent in September, down 2.6 per cent in August, up 0.9 per cent in July, up 1.4 per cent in June, down 0.5 per cent in May, up 2.7 per cent in April. Satish Kumar / The National
    Mudon: Dh1,013 per square foot — down 0.7 per cent in October, up 2.1 per cent in September, down 2.6 per cent in August, up 0.9 per cent in July, up 1.4 per cent in June, down 0.5 per cent in May, up 2.7 per cent in April. Satish Kumar / The National
  • Jumeirah Village Triangle: Dh1,031 per square foot — up 2.8 per cent in October, up 0.4 per cent in September, up 0.7 per cent in August, down 0.1 per cent in July, up 3.7 per cent in June, down 0.2 per cent in May, up 2.3 per cent in April. Pawan Singh / The National
    Jumeirah Village Triangle: Dh1,031 per square foot — up 2.8 per cent in October, up 0.4 per cent in September, up 0.7 per cent in August, down 0.1 per cent in July, up 3.7 per cent in June, down 0.2 per cent in May, up 2.3 per cent in April. Pawan Singh / The National
  • Sustainable City: Dh966 per square foot — down 0.4 per cent in October, up 0.5 per cent in September, down 0.7 per cent in August, up 0.7 per cent in July, up 2.6 per cent in June, down 0.8 per cent in May, up 0.6 per cent in April. Antonie Robertson / The National
    Sustainable City: Dh966 per square foot — down 0.4 per cent in October, up 0.5 per cent in September, down 0.7 per cent in August, up 0.7 per cent in July, up 2.6 per cent in June, down 0.8 per cent in May, up 0.6 per cent in April. Antonie Robertson / The National
  • Town Square: Dh823 per square foot — up 1.5 per cent in October, up 0.4 per cent in September, up 0.6 per cent in August, up 0.6 per cent in July, down 0.8 per cent in June, down 1.0 per cent in May, up 1.4 per cent in April. Satish Kumar / The National
    Town Square: Dh823 per square foot — up 1.5 per cent in October, up 0.4 per cent in September, up 0.6 per cent in August, up 0.6 per cent in July, down 0.8 per cent in June, down 1.0 per cent in May, up 1.4 per cent in April. Satish Kumar / The National
  • Living Legends: Dh825 per square foot — down 4.2 per cent in October, down 1.9 per cent in September, up 2.6 per cent in August, up 0.7 per cent in July, up 4.0 per cent in June, up 1.2 per cent in May. Pawan Singh / The National
    Living Legends: Dh825 per square foot — down 4.2 per cent in October, down 1.9 per cent in September, up 2.6 per cent in August, up 0.7 per cent in July, up 4.0 per cent in June, up 1.2 per cent in May. Pawan Singh / The National
  • Jumeirah Village Circle: Dh601 per square foot — down 1.8 per cent in October, down 1.3 per cent in September, down 1.4 per cent in August, up 3.3 per cent in July, down 1.6 per cent in June, up 0.8 per cent in May, up 1.3 per cent in April. Antonie Robertson / The National
    Jumeirah Village Circle: Dh601 per square foot — down 1.8 per cent in October, down 1.3 per cent in September, down 1.4 per cent in August, up 3.3 per cent in July, down 1.6 per cent in June, up 0.8 per cent in May, up 1.3 per cent in April. Antonie Robertson / The National
  • Falconcity of Wonders: Dh756 per square foot — up 0.9 per cent in October, down 2.0 per cent in September, up 4.8 per cent in August, up 0.7 per cent in July, flat in June, down 2.5 per cent in May, up 1.6 per cent in April. Sarah Dea / The National
    Falconcity of Wonders: Dh756 per square foot — up 0.9 per cent in October, down 2.0 per cent in September, up 4.8 per cent in August, up 0.7 per cent in July, flat in June, down 2.5 per cent in May, up 1.6 per cent in April. Sarah Dea / The National
  • Damac Hills 2: Dh595 per square foot — down 1.2 per cent in October, down 0.4 per cent in September, down 0.5 per cent in August, down 0.4 per cent in July, down 1.6 per cent in June, up 1.0 per cent in May, up 1.3 per cent in April. Photo: Allsopp & Allsopp
    Damac Hills 2: Dh595 per square foot — down 1.2 per cent in October, down 0.4 per cent in September, down 0.5 per cent in August, down 0.4 per cent in July, down 1.6 per cent in June, up 1.0 per cent in May, up 1.3 per cent in April. Photo: Allsopp & Allsopp

Ras Al Khaimah's planned multibillion-dollar resort on Marjan Island with Las Vegas hotel operator Wynn Resorts will be one to keep an eye on, Mr Waind said.

The rise in rents in Dubai has led to an increase in rental disputes and eviction notices as landlords seek to make the most of the market conditions.

Some tenants have been willing to pay increases above the rental rates stipulated by Rera to avoid a dispute and the potential of incurring moving costs. Ultimately, they have ended up paying higher rental rates for a new lease agreement.

Paying annual rent with one cheque is on the rise again in Dubai.

“This year, we have already seen rental records being broken with the most expensive rental in Dubai history and the most expensive in Jumeirah Islands — there are definitely quite a few multi-million-dirham rental contracts to be signed next year,” said Simon Boden, leasing director at LuxuryProperty.com.

“The simple fact is that tenants are willing to pay more for an exceptional property, and scarcity gives every home that extra air of exclusivity.”

Apartment rents in Downtown Dubai were up 24 per cent annually in the third quarter, while villa rents in Arabian Ranches had risen 27 per cent and Springs villas were up 24 per cent, data from property consultancy Asteco showed.

There was a strong performance in the capital's market as well in 2022.

Abu Dhabi's property market recorded 4,441 transactions amounting to $5.7 billion (Dh21.04 billion) in the third quarter. In comparison, transactions for the third quarter of 2021 reached a total of Dh16.2 billion.

Yas Island topped the list for highest value of transactions with Dh1 billion ($272 million). It was followed by Saadiyat Island with Dh929 million worth of transactions during the period from July to September.

Major property projects have been launched in the capital this year, including Aldar Properties' Saadiyat Lagoons, Yas Park Gate and Grove District on Saadiyat Island.

Other projects include Reem Hills on Reem Island, Bloom Living, close to Abu Dhabi International Airport, and the second phase of Imkan's Riviera development on the coast between Abu Dhabi and Dubai.

“2022 has moved fast with strong sales across the board, from studio apartments for investors up to large golf course or sea-front villas for owner occupiers,” said Andrew Covill, director at Henry Wiltshire International.

“We expect the same pattern to continue in 2023 — with the current stock shortages we see for villas or quality apartments with sea views. While there have been new developer launches for villas, these will not be delivered for another three to five years leaving a big squeeze on supply of completed villas in the meantime.”

The rental market was largely stable throughout 2022, with Hidd Al Saadiyat standing out with a 9 per cent annual rise in the third quarter.

Abdul Jabar Qahraman was meeting supporters in his campaign office in the southern Afghan province of Helmand when a bomb hidden under a sofa exploded on Wednesday.

The blast in the provincial capital Lashkar Gah killed the Afghan election candidate and at least another three people, Interior Minister Wais Ahmad Barmak told reporters. Another three were wounded, while three suspects were detained, he said.

The Taliban – which controls much of Helmand and has vowed to disrupt the October 20 parliamentary elections – claimed responsibility for the attack.

Mr Qahraman was at least the 10th candidate killed so far during the campaign season, and the second from Lashkar Gah this month. Another candidate, Saleh Mohammad Asikzai, was among eight people killed in a suicide attack last week. Most of the slain candidates were murdered in targeted assassinations, including Avtar Singh Khalsa, the first Afghan Sikh to run for the lower house of the parliament.

The same week the Taliban warned candidates to withdraw from the elections. On Wednesday the group issued fresh warnings, calling on educational workers to stop schools from being used as polling centres.

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Analysis

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Updated: December 28, 2022, 5:30 AM
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