According to market analysts, real estate market activity in Abu Dhabi and Dubai remained strong in the first three months of 2022, due to several other government initiatives, economic development, and better confidence.
According to property market experts at Asteco, a leading property management firm, around 3,800 residential units were delivered across Abu Dhabi’s residential and office market in Q1 2022, spread across different areas of Abu Dhabi including Al Raha Beach, Al Reem Island, Yas Island, and Saadiyat Island, as well as several other residential areas.
According to Asteco analysts, numerous residential and mixed-use projects in the Investment Zones are expected to begin construction in 2022, and a large majority of Abu Dhabi developers are now considering developing new residential and mixed-use projects in various areas of Abu Dhabi as a result of the generally positive and market sentiment.
In Q1 2022, average villa rental rates increased by 2%, with some developments seeing rises of up to 10%. The average annual rate of increase was 5%.
In Dubai, new apartment supply increased dramatically in the first quarter of 2022, with 6,250 units handed over, up from less than 4,000 in the previous quarter. The villa market, on the other hand, lagged far behind, with barely 250 units finished and handed over.
According to the analysis, Dubai’s new supply for 2022 is projected to fall short of prior predictions. By the end of the year, 29,000 flats and 3,250 villas are planned to be delivered, with other projects likely to be delayed and pushed until 2023.
“New supply — current, and future — is scattered throughout Dubai with deliveries in established communities, such as Dubai Marina and Business Bay, as well as in upcoming developments including Port De La Mer, MBR City, Dubai Hills Estate, Damac Hills 1 and 2. New project launches (off-plan, under construction, and completed developments) continued to be well received by investors and end-users,” said the report.
The restricted quantity of new handovers translated into increased rental and occupancy rates in Dubai, where villas remained the primary focus of demand. The average annual rental rate in the villa market increased by 25%, while average apartment rental prices increased by 14%.
Over the last three months, office rental rates increased by 4% on average, while net effective rents may have been influenced by additional incentives. Asteco reported that annual changes were 6.0 percent.
“The positive benefits of Expo 2020 will no doubt be felt across a wide range of sectors for many years. The tangible benefits resulting from infrastructure upgrades and the repurposing (legacy) of the site for start-up companies is apparent. However, perhaps the most important legacy will be in the new business partnerships created, increased tourism, and the refocusing of Dubai towards the Digital Economy, not to mention, the continuing strides Dubai is making to facilitate this transition,” said the report.
District 2020 will keep more than 2.8 million square feet of Gross Floor Area from Expo 2020 Dubai’s Leed Gold and Platinum towers. With a population of 145,000 people, these will be converted into residential, commercial, and cultural neighborhoods in stages. Additionally, 108 serviced land plots for residential, hospitality, commercial, and mixed-use development will be offered for purchase at a later date. The total GFA planned for construction is 28 million square feet.
Apartment rental rates in the Northern Emirates increased marginally in Q1 2022, with average increases of 2.0% and 1.0 percent annually.
For the first time in nearly five years, Sharjah office rental rates saw positive quarterly and yearly growth of 3.0% on average. Nonetheless, landlords will continue to provide rent discounts and flexible payment terms as incentives.
The number of sales transactions in Sharjah and Ajman remained high, notably in the villa market. Over the latest quarter, Sharjah apartment sales prices stayed almost steady, with yearly gains averaging 8%.
According to Asteco, the Al Ain real estate market has remained reasonably constant over the last six months, with modest increases in demand and activity across all sectors.