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Abu Dhabi, United Arab Emirates
The UAE’s real estate sector is showcasing robust performance midway through 2024, with strong price, rental and transactional activity levels in its key markets of Abu Dhabi and Dubai, according to CBRE Middle East, a leader in commercial real estate.
In Abu Dhabi, leasing in the office sector remained strong in the second quarter, with a 16% increase in rental registrations compared to the previous year. Rental rates also improved, with increases of 9.1%, 7.4% and 14.5% in the Prime, Grade A, and Grade B segments, respectively, stated CBRE in its latest edition of the UAE Real Estate Market Review for Q2 2024.
The demand and performance are expected to remain strong in the second half of 2024, it added.
In Dubai, leasing activity in the occupier market surged in Q2, with a 38.4% increase in rental registrations compared to the previous year, where 95.3% of transactions were below 2,000 sq ft of space.
Rental growth remained robust over this period with respective increases of 4.7%, 19.9%, 20.9%, and 15.0% year-on-year in the Prime, Grade A, Grade B, and Grade C segments.
In Abu Dhabi’s residential market, a total of 2,108 sales transactions were recorded in Q2 of 2024, marking a decline of 22.8% compared to a year earlier. Compared to Q2 2023, average apartment and villa prices registered a year-on-year increase of 6.2% and 3.9%, respectively.
In Q2, the rental market in Abu Dhabi saw a decrease of 9.5% in the number of rental registrations compared to the previous year, with a total of 41,368 registrations.
However, for the same three-year period, the average apartment rents surged by 6.6% and average villa rents grew by 2.5% compared to the same period last year.
In terms of supply, 1,445 units were completed in Abu Dhabi in the first half of 2024, with the majority (88.7%) located in Al Maryah Island and Yas Island.
An additional 6,791 units are expected to be delivered during the remainder of the year, with 42.3% of this upcoming stock located in Al Sowwah and Yas Island, said the CBRE report.
In Dubai, the residential market continues to show strong performance, where the average prices registered an increase of 21.3% compared to the year prior, up from the 20.1% growth registered a month earlier.
This increase has been underpinned by a rise of 20.7% in average apartment prices and a 24.3% increase in average villa prices. In terms of supply, in the year to date to Q2 2024, 12,249 units have been delivered in Dubai, where 44.4% of these units were completed in Meydan One, Al Furjan, and Jumeirah Village Circle.
In the year to date to June 2024, a total of 73,618 residential transactions have been registered in Dubai, the most on record during the first half of a year, while registering a year-on-year increase of 27.6%.
Off-plan sales increased by 41.0% throughout the same period, and secondary market sales rose by 8.2%. Performance within Dubai’s residential market is expected to remain strong over the upcoming period.
In the retail sector, in the second quarter of the year, the total number of retail rental registrations in Dubai, stood at 17,509, registering a marginal increase of 0.1% compared to the previous year. Over this period, renewed rental contracts increased by 4.4%, while new registrations declined by 8.6%.
In Abu Dhabi’s retail market, activity levels were subdued in the second quarter of 2024, where the total number of rental contracts registered reached 7,048, down by 10.2% compared to the prior year. Over this period, new rental contracts registered recorded a year-on-year increase of 13.8%, whilst renewed rental registrations declined by 20.5%. In both cities, rental performance remained strong during the second quarter of 2024.
Average retail rents in Abu Dhabi increased by 3.6% from the previous year, and average rents in Dubai increased by 6.0% year-on-year. Moving forward and given the prevailing market fundamentals, additional increases in rental rates are expected.
In UAE’s Industrial and logistics Sector, activity levels remained somewhat subdued in Q2 2024. In Abu Dhabi, the total number of rental registrations declined by 4.1% compared to the year prior. Over this period, new registrations increased by 3.1%, whilst renewed contracts registered decreased by 8.4%.
The manufacturing sector remains the largest source of occupier activity in Abu Dhabi. The key demand drivers within the capital continue to be competitive power and labour costs. In Dubai, the total number of rental registrations stood at 2,394 in Q2 2024, marking an increase of 2.5% from the previous year.
This growth has been underpinned by a 3.0% rise in new registrations and a 2.3% rise in renewed rental contracts registered over the same period. In Q2 2024, rents in Abu Dhabi’s industrial and logistics market increased by 4.7% compared to the year prior, while average rents in Dubai registered a growth of 10.6% year-on-year.
The fundamentals supporting both markets are expected to continue to drive performance in the second half of the year. With demand continuing to outpace supply, and future supply deliveries remaining relatively limited, rents are set for additional growth over the upcoming period, albeit not at the same pace, whilst new institutional-grade assets are expected to reach unprecedented levels.
Taimur Khan, the Head of Research Mena in Dubai, said: "The UAE’s real estate sector continues to showcase robust performance midway through 2024, with strong price, rental and transactional activity levels continuing to defy trends seen in many key global markets."
"However, we are also seeing that supply constraints may now be starting to impact activity levels across a range of sectors, although this is likely to continue to underpin price and rental growth into the second half of the year," stated Khan.
"As a result of the scale of demand we are currently seeing, we are seeing developers increasingly bring forward development plans to ensure that the lack of available stock does not continue to hamper potential activity into the medium and long-term," he added.-
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