The UAE’s residential market has started the year on a relatively strong note, with high levels of activity and absorption, which will continue to support price growth in both Abu Dhabi and Dubai over the remainder of the year, according to CBRE Middle East, the global leader in commercial real estate services and investments.
In Abu Dhabi, the total volume of transactions was 2,795, a 22.6% increase from the previous year. According to CBRE Middle East’s latest edition of the UAE Residential Market Review for the first quarter of 2024, this increase is driven by an 18.1% increase in off-plan sales and a 34.5% increase in secondary market sales.
Abu Dhabi’s average apartment and villa prices rose by 4.3% and 2.3%, respectively, in the year to the first quarter of 2024.
In the first quarter of 2024, Abu Dhabi’s rental market saw 46,130 residential rental contracts, a 10.9% decrease from the previous year. This is due to a 15.5% decrease in the number of renewed rental contracts registered and a 2.4% decrease in new rental registrations during the same period.
In the year leading up to the first quarter of 2024, average apartment and villa rents increased by 4.5% and 1.1%, respectively. In terms of supply, only 80 units were delivered in Abu Dhabi during the first three months of the year, with all of the new stock located in Al Raha Beach.
An additional 8,660 units are expected to be completed by the end of the year, with Yas Island, Al Sowwah, and Al Shamkha accounting for 55.8% of the scheduled stock.
In Dubai, price growth has accelerated in the first quarter of 2024, with average prices rising 20.7% in the year to March 2024. During this time, the average apartment and villa prices rose by 20.4% and 22.1%, respectively.
Although headline average sales rates are still 0.1% lower than the 2014 highs, several prominent residential neighborhoods have already surpassed them.
As of March 2024, the average apartment price was AED1,486 per square foot, while the average villa price was AED1,776. The average villa sales rate is currently 22.9% higher than it was in 2014.
According to CBRE, rental growth has accelerated in 2024, following a period of moderation in 2023.
In March, average residential rents increased by 21.2% year on year, up from 20.4% in the previous month. During this time, average apartment and villa rental rates increased by 22.1% and 14.5%, respectively.
According to data from the Dubai Land Department, the total number of rental registrations for the year to March 2024 was 159,941, a 5.8% increase over the previous year.
In terms of supply, 6,526 units were delivered in the first quarter of this year, with Meydan One, Jumeirah Village Circle, and Al Furjan accounting for 59.7% of that total.
An additional 46,086 are expected to be handed out over the year. However, due to historical materialization rates, we anticipate that only a portion of the upcoming stock will be available as scheduled.
In March 2024, Dubai’s residential market set another record, with transaction volumes reaching their highest monthly figure on record, representing a 13.2% year-on-year increase. During this time, off-plan sales increased by 20.2%, while secondary market sales increased by 2.2%.
In the first quarter of 2024, Dubai’s total transaction volume was 35,310. This is the highest first-quarter total ever recorded, up 20.5% from the previous year.
Off-plan transactions grew by 23.9% during this period, while secondary market transactions increased by 15.2%.
However, CBRE reported that in Q1 2024, the total number of sales transactions within the prime market segment decreased by 2.1% compared to the previous year.
During this period, super-prime transactions fell by 16.5% year on year, totaling 227.
These declines in both markets have been largely supported by significant declines in off-plan sales, which are primarily due to high levels of demand for off-plan properties and a limited amount of upcoming supply, according to the report.
In terms of performance, average prime prices increased by 16% year on year in the first quarter of 2024, reaching AED 4,661 per square foot, while average super-prime prices increased by 14.8% over the same period, reaching AED4,978 per square foot.
Taimur Khan, the Head of Research Mena in Dubai, said: “The UAE’s residential market started the year on a relatively strong note, where the elevated demand levels continue to drive performance. The strong levels of activity and high absorption levels, which have reduced available supply, will continue to support price growth in both Abu Dhabi and Dubai over the remainder of the year.”
“In terms of rental growth, we expect that rental rates in Abu Dhabi will continue to rise, with prime areas set to outperform the market. In Dubai, residential rents will continue to increase; however, not at the same rate that we have been seeing to date, and we expect that the rate of change will diminish in the second half of the year,” noted Khan.
“Looking ahead, we expect Dubai’s residential sales market to maintain its upward trajectory. Prices in both the apartment and villa segments of the market will continue to grow, however, not at the same pace. On the rental front, we forecast that residential rents will continue to increase. That being said, the rate of growth will likely moderate,” he added.
