The real estate market in the UAE continues to flourish, with both Dubai and Abu Dhabi experiencing rises in sales prices and rents, as reported by CBRE Middle East’s Residential Market Review for the first quarter of 2024.
Dubai villas have seen a significant increase in sales prices, rising by over 22 percent year-on-year.
CBRE stated that in the first quarter of 2024, apartments and villas in both Dubai and Abu Dhabi witnessed positive price increases.
Dubai and Abu Dhabi real estate prices
In Dubai, the growth in prices has continued to accelerate in the first quarter of 2024, with average prices rising by 20.7 percent in the year up to March 2024.
During this period, average apartment prices increased by 20.4 percent, while villa prices increased by 22.1 percent.
Although the average sales rates are slightly below the highs of 2014 by 0.1 percent, many significant residential areas have already exceeded their 2014 figures.
As of March 2024, average apartment prices were AED 1,486 ($405) per square foot, and average villa prices reached AED 1,776 ($484) per square foot.
Average villa sales rates are now 22.9 percent higher than their 2014 baseline.
Rental growth has also picked up momentum in 2024, following a period of moderation in 2023. In March 2024, average residential rents saw a year-on-year increase of 21.2 percent, up from the 20.4 percent growth registered a month earlier.
During this period, average apartment and villa rental rates increased by 22.1 percent and 14.5 percent, respectively.
Data from the Dubai Land Department showed that, in the year up to March 2024, the total number of rental registrations reached 159,941, marking a 5.8 percent increase from the previous year.
Regarding supply, a total of 6,526 units were completed in the first quarter of the year, with 59.7 percent of this supply situated in Meydan One, Jumeirah Village Circle, and Al Furjan.
An additional 46,086 units are anticipated to be delivered throughout the remainder of the year. Nonetheless, considering past rates of realization, CBRE anticipates that only a limited portion of this forthcoming stock will be available as scheduled.
March 2024 saw another milestone in Dubai’s residential market, with transaction volumes reaching the highest monthly figure on record, marking a 13.2 percent year-on-year growth.
During this period, both off-plan sales and secondary market sales increased by 20.2 percent and 2.2 percent, respectively.
In the first quarter of 2024, Dubai’s total transaction volumes reached 35,310, the highest ever recorded in the first quarter, representing a 20.5 percent increase from the previous year.
During this period, off-plan transactions increased by 23.9 percent, and secondary market transactions rose by 15.2 percent.
However, in Q1 2024, the total number of sales transactions in the prime market segment decreased by 2.1 percent compared to the previous year.
During this period, super-prime transactions experienced a 16.5 percent year-on-year decline, totaling 227 transactions.
These declines observed in both markets were mainly driven by significant decreases in off-plan sales, largely due to high demand for off-plan properties and limited upcoming supply.
In terms of performance, in the first quarter of 2024, average prime prices recorded a year-on-year increase of 16 percent, averaging AED 4,661 ($1,269) per square foot, while average super-prime prices increased by 14.8 percent over this period, reaching AED 4,978 ($1,355) per square foot.
Looking ahead, CBRE expects Dubai’s residential sales market to continue its upward trend
Prices in both the apartment and villa segments of the market will continue to rise, albeit not at the same pace.
Regarding rentals, the company analysts forecast that residential rents will continue to increase, although the rate of growth is expected to slow down.
In Abu Dhabi, during the first quarter of the year, the total volume of transactions was 2,795, showing a 22.6 per cent increase compared to the previous year.
This growth has been supported by an 18.1 per cent increase in off-plan sales and a 34.5 per cent increase in secondary market sales.
In the year up to Q1 2024, average apartment and villa prices in Abu Dhabi rose by 4.3 per cent and 2.3 per cent, respectively.
Abu Dhabi’s rental market saw 46,130 residential rental contracts in Q1 2024, marking a 10.9 per cent decrease from the previous year.
This decline is attributed to a 15.5 per cent decrease in renewed rental contracts and a 2.4 per cent decrease in new rental registrations during the same period.
Average apartment and villa rents increased by 4.5 per cent and 1.1 per cent, respectively, in the year leading up to Q1 2024.
Regarding supply, only 80 units were delivered in Abu Dhabi in the first three months of the year, all of which were in Al Raha Beach.
An additional 8,660 units are expected to be completed by the end of the year, with 55.8 per cent of this scheduled stock located in Yas Island, Al Sowwah, and Al Shamkha.
Taimur Khan, Head of Research MENA in Dubai, commented: “The UAE’s residential market began the year on a relatively strong note, with sustained demand driving performance.”
“The high levels of activity and absorption, which have reduced available supply, will continue to support price growth in both Abu Dhabi and Dubai throughout the year.”
“We anticipate that rental rates in Abu Dhabi will continue to rise, particularly in prime areas.”
“In Dubai, residential rents will also continue to rise, albeit at a slower rate than previously seen, and we expect the pace of change to slow in the second half of the year.”
