Today's Edition
KHALED AL KHAWALDEH (ABU DHABI)
A new report by First Abu Dhabi Bank (FAB) predicts strong growth within the UAE's equity and real estate markets in 2025, with the bank believing the country is well-placed to benefit from several economic trends.
According to the FAB's 2025 Investment Outlook, the UAE's economy is forecast to expand at 5.6% in 2025, making it one of the fastest-growing economies in the world.
The report points towards consistently positive non-oil PMI scores, and strong foreign trade performance in 2024 as evidence of robust economic activity within the country. It highlights the UAE's 10% trade surplus with its major partners as an example of the country's strong market position, noting the increasingly prominent role the UAE is playing in developing markets including in Africa.
"The GCC countries are also rapidly expanding their economic ties down south, especially the UAE, which is now the fourth largest investor in Africa," the report reads.
One of the key sectors where FAB believes the UAE has a marked advantage is Real Estate, noting the country's success despite economic and geopolitical headwinds. The report notes the high demand for office space as evidence of the sector's strength going into the new year, with occupancy rates of up to 93% for grade-A stock. It also notes the rising sales volumes for properties in both Abu Dhabi and Dubai, predicting that this investor appetite will continue into the new year.
"Markets, especially in the US, UK, and Europe, reflect a common global story. However, the UAE's domestic market tells a very different post-pandemic tale," the report reads.
"The UAE has been a key beneficiary amid regional challenges with capital flows rising from affected countries, particularly into the UAE's real estate market. And while the residential market is the high performer, the office, hospitality and retail sectors have also evidenced solid growth."
"The rising tide has indeed lifted all boats with the retail, industrial and logistics sectors enjoying continued expansion, thanks to the strength of the non-oil economy. At the same time, a highly competitive and borrower-friendly lending market is expected to drive increased capital market activity across all sectors in 2025," the report reads.
The forecasted growth is expected to deliver strong growth for prospective investors with FAB predicting an average 2.9% growth in portfolio valuation for UAE equity holders. FAB highlighted the new end-of-service scheme, which allows employees to invest their end-of-service benefits into managed funds, as a key policy that could fire up the growing asset market in the country.
