Rising Trends: Exploring the UAE Real Estate Landscape in Q1 2024
A snapshot of vibrant activity and resilient growth across various sectors. Despite challenges, the market showcases robust demand and escalating rental rates, particularly in office spaces. In Dubai and Abu Dhabi, limited new deliveries haven’t dampened the fervor for Grade A accommodations, with significant increases observed in rental prices. Join us as we delve into the dynamics shaping the real estate landscape in the UAE’s dynamic cities.
Residential Market Dynamics
In Q1 2024, Dubai’s residential market witnessed significant activity, with approximately 10,000 units completed, pushing the total stock to 729,000 units. Prime areas like MBR City and Business Bay led this surge, with an additional 25,000 units expected by year-end. Abu Dhabi also experienced a steady influx of residential units, with 1,600 completed in Q1 and another 6,000 anticipated by the end of the year.
Market Trends and Insights
Faraz Ahmed, research director at JLL MENA, highlighted a notable 20% increase in residential sales transactions in Dubai and a 17% uptick in Abu Dhabi. Rising land prices and construction costs are prompting developers to explore secondary locations and focus on properties within the Dhs2m price range, aligning with the Golden Visa eligibility threshold. Both Dubai and Abu Dhabi witnessed significant annual increases in pricing, with apartment rentals in Dubai soaring by 22% and villa rentals by 14%. In Abu Dhabi, villa sale prices surged by 9% year-on-year.
Hospitality Sector Growth
The hospitality sector in Dubai welcomed nearly 2,000 new hotel keys in Q1 2024, primarily in upscale properties in areas like Business Bay, with another 5,000 keys expected throughout the year. Abu Dhabi’s hotel supply remained stable, with an additional 500 keys anticipated. Dubai’s tourism sector recorded an 18% increase in visitors, sustaining a 5% growth in average daily rates, while Abu Dhabi’s hotel performance saw an 8% year-on-year increase in ADR.
Office Space Demand and Rental Rates
Despite the relatively limited introduction of new office spaces, the demand for such spaces continued to exhibit strength in both Dubai and Abu Dhabi throughout the first quarter of 2024. This sustained demand led to a notable surge in rental rates across the board. In Dubai, Grade A rents within the central business district (CBD) experienced a remarkable year-on-year increase of 22%, signaling the robust appetite among businesses for premium office accommodations in prime locations. Similarly, Abu Dhabi witnessed a significant uptick in average city-wide rents, with a notable 14% rise observed over the same period. This surge in rental rates underscores the resilience and attractiveness of the office markets in both cities, despite the challenges posed by limited new supply.
Evolving Retail Landscape
The retail landscape is evolving, with a focus on smaller community malls driven by limited space availability in prime malls. Owners are investing in refurbishments and experiential concepts to enhance the retail experience. In Dubai, approximately 12,000 sqm of new retail space was added in Q1 2024, with another 104,000 sqm expected throughout the year.
Robust Growth in the Industrial Sector
The industrial sector in the UAE witnessed robust growth, fueled by factors like the new India-UAE trade agreement and expanding e-commerce activities. Warehouse rents surged in key areas, with strategic collaborations between developers aiming to address supply shortages. Abu Dhabi’s industrial sector also experienced strong demand, particularly in submarkets like KEZAD and ICAD, where rental rates saw notable increases.
In Conclusion
The industrial sector in the UAE witnessed robust growth, fueled by factors like the new India-UAE trade agreement and expanding e-commerce activities. Warehouse rents surged in key areas, with strategic collaborations between developers aiming to address supply shortages. Abu Dhabi’s industrial sector also experienced strong demand, particularly in submarkets like KEZAD and ICAD, where rental rates saw notable increases.