Dubai’s real estate market has remained resilient in the first three months, while Abu Dhabi’s residential sales market is showing promising signs of growth shortly, with a gradual upward trajectory expected in the coming months, according to property expert Asteco.
Dubai’s strong economic performance and commitment to improving quality of life and attracting skilled professionals will continue attracting many expatriates, according to Asteco’s Q1 2024 real estate report.
During the three months, the Dubai market received over 10,000 residential units, including 7,300 apartments and 2,750 villas.
This represents a significant increase over the previous quarter and indicates a promising trajectory for the coming year. An additional 30,000 units are expected to enter the market by 2024.
Rental rate growth has been a mixed bag over the last three months. While average apartment and villa rental rates have remained relatively stable, rental rate growth varies by community.
According to the report, annual growth rates have slowed to single digits, with villas at 6% and apartments close behind at 10%.
According to data from the Dubai Land Department (DLD), the number of new contracts issued in Q1 2024 decreased by 4% when compared to the previous quarter and the same period last year. Renewals, on the other hand, increased by 5% quarter over quarter and 12% year over year, with many tenants agreeing to higher-than-average rent increases.
Similar to the leasing market, average sales prices for both apartments and villas remained relatively stable throughout the first quarter of 2024, with some variations observed at the community level. The annual growth rates for apartments and villas were 6% and 8%, respectively.
The new year saw a gradual shift in buyer preferences, with apartments in established communities like Jumeirah Village Circle (JVC), Business Bay, Dubai Marina, and Downtown Dubai gaining popularity.
Apartments typically provide a higher Return on Investment (ROI), which is due to factors such as lower initial investment costs, increased rental demand, higher occupancy rates, and shorter vacancy periods. The off-plan market remained dominant in terms of both value and volume of transactions.
The Asteco report stated that the residential sales market in Abu Dhabi was showing promising signs of growth shortly, with a gradual upward trajectory expected in the coming months.
The Abu Dhabi market saw the completion of 800 residential units across various Investment Zones, with the majority concentrated in Al Raha Beach. The most notable development was the opening of Yas Canal, a new mega villa project in the same area.
This project is expected to be completed by the fourth quarter of 2027 and will deliver 1,146 units exclusively to UAE nationals.
Throughout Q1 2024, the rental market for villas and apartments remained generally stable, with prime and high-end developments seeing significant demand, resulting in 7% to 10% rental increases over the previous year, particularly for new contracts.
The rise in rental rates for high-quality office space that began in 2023 has continued into 2024. Some developments saw increases of 5% to 7%, depending on unit size and payment terms.
The limited availability of premium office space in Abu Dhabi, combined with rising demand from expanding businesses spurred by the government’s efforts to attract foreign investment, has contributed to the increase in rental rates.
During the first quarter of 2024, transaction volume in Abu Dhabi’s sales market increased significantly. Approximately 2,660 deals for apartments and villas were recorded, representing a notable 17% increase over the same period last year.
Off-plan sales accounted for roughly 1,840 transactions, or approximately 69% of the total, representing a 2% increase over the previous quarter. During this time, apartment sales accounted for roughly 73% of all off-plan sales and nearly 78% of completed property transactions.
While average apartment sales prices across the market remained relatively stable, there was a noticeable increase in the upper and luxury segments on Yas and Saadiyat Islands.
Average villa sales prices rose modestly, ranging between 1% and 3% every quarter. However, year-on-year growth was more significant, reaching 10% to 15%, according to the report.
Asteco said the Northern Emirates market performed particularly well in Q1, indicating resilience and the potential for continued growth.
Average apartment rental rates in the Northern Emirates rose 4% in the quarter and 9% year on year, with high-end properties showing slightly faster growth than typical units.
Ras Al Khaimah emerged as the leader in rental rate increases, closely followed by Sharjah and Ajman.
In the Al Ain market, average rental rates remained relatively consistent across all asset classes. This performance has been supported by sustained demand, primarily driven by domestic factors.
While apartment rental rates remained broadly stable, adjustments were observed, particularly in the price-sensitive lower-end segment, according to Asteco’s report.
At the other end of the market, high-quality villas experienced significant annual rental growth of up to 8%, with the rate of increase determined by factors such as location and condition, it added.