15 May 2024
The UAE real estate market started off the year 2024 with a bang. Around 10,000 units were completed in the first quarter alone, pushing the total stock of residential units to 729,000. The construction frenzy shows no signs of slowing down, with an additional 25,000 units expected to be delivered by the end of the year, mainly in popular areas like MBR City and Business Bay. Meanwhile, Abu Dhabi also saw a steady increase in residential units, with 1,600 completed so far and another 6,000 on track for completion by the end of the year. Both cities also saw significant increases in sales transactions, with a 20% rise in Dubai and a 17% jump in Abu Dhabi. With these impressive numbers, it is evident that the UAE real estate market is still in its heyday.
Nevertheless, with rising costs for land and building, real estate developers are turning their attention to secondary locations and properties within the Dhs2m price range to meet the requirements for Golden Visa eligibility. Both Dubai and Abu Dhabi have seen significant annual increases in prices, especially for apartments, leading to higher sale prices and rental rates overall.
Dubai’s apartment rentals saw a remarkable surge of 22%, outpacing villa rentals at 14 per cent. Meanwhile, in Abu Dhabi, villa sale prices surged by 9 per cent year-on-year (YoY).
Photo: Enrico Strocchi
Hospitality growth boosts demand for UAE real estate
During the first quarter of 2024, Dubai's hospitality industry saw the addition of almost 2,000 new hotel rooms, largely in the upscale segment located in areas such as Business Bay. The city is projecting another 5,000 rooms to be added throughout the remainder of the year.
Meanwhile, Abu Dhabi's hotel supply remained consistent with a projected increase of five hundred new rooms. Both cities experienced significant growth in tourism, with Dubai welcoming an 18% increase in visitors and maintaining a steady 5% growth in daily rates. Similarly, Abu Dhabi saw a robust performance with an 8% year-over-year increase in average daily rates. The increasing demand for hospitality means the UAE real estate sector is having to go full steam ahead to keep pace. This bodes well for the sector, and the national economy as well.
Photo: Marc Deriaz
Office segment faces supply limitations
The office market in Dubai saw limited new additions during Q1 2024, with only about 17,000 sqm of space becoming available. Despite this, there was a consistent demand for fitted spaces from corporate tenants. In Abu Dhabi, the office market remained steady and is expected to add 79,000 sqm of new space throughout the year. Rental rates in both cities have increased significantly, with a 22% increase in Grade A rents in Dubai's central business district and a 14% increase in average city-wide rents in Abu Dhabi.
Due to the limited availability of space in popular malls, attention is shifting towards smaller community malls in Dubai and Abu Dhabi. In an effort to improve the UAE real estate landscape for offices, owners are investing in renovations and creating immersive experiences for shoppers. The first quarter of 2024 saw the addition of 12,000 square meters of new retail space in Dubai, with an additional 104,000 square meters expected throughout the year.
Photo: Paweldotio
Robust growth in the industrial sector further boosts UAE real estate sector
The industrial segment in the UAE real estate sector experienced a surge in demand, thanks to the new trade agreement between India and the UAE and the increase in e-commerce activities. Key areas saw a rise in warehouse rents, with JAFZA reporting a significant 26% annual increase, averaging Dhs365 per sqm per annum. To meet the growing demand, developers are collaborating on projects to address supply shortages. One such collaboration is between Dubai South and Aldar, who are working together to develop a Grade A build-to-lease logistics facility spanning 24,000 sqm in Dubai South's Logistics District. The project is expected to be completed by the end of this year.
Meanwhile, Q1 2024 saw the demand in Abu Dhabi's industrial sector remain strong due to growth in the non-oil sector and increased e-commerce activities. Rental rates in major submarkets experienced a significant increase, driven by high demand from Dubai and limited availability of Grade A spaces. The Industrial City of Abu Dhabi (ICAD) and Khalifa Economic Zones Abu Dhabi (KEZAD) were particularly popular among tenants. With an annual surge of 6 per cent, warehouse rents in ICAD reached Dhs370 per sqm per annum, while KEZAD experienced a 5 per cent increase, reaching Dhs400 per sqm per annum. The presence of Grade A supply makes KEZAD an attractive option for tenants seeking top-quality warehouse facilities.
All in all, the UAE real estate sector remains strong as ever, with prices rising even as new units are added.
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