UAE Real Estate Analysis: Abu Dhabi Sales Price Constant, Dubai Rents Up Over 20%

UAE Real Estate Analysis

The real estate market in the United Arab Emirates (UAE), particularly in Dubai and Abu Dhabi, is displaying remarkable resilience in the face of challenges such as rising interest rates and inflation.

The Q2 2023 market report by UAE real estate firm Asteco provides insights into the trends and performance of the real estate markets in Dubai and Abu Dhabi. Here are the key points highlighted in the report:

Dubai Real Estate Market:

Residential Supply: Approximately 11,000 residential units were delivered in Dubai during Q2 2023, with the majority being apartments (9,400 units). While the supply of villas slowed down during the quarter, it’s expected to pick up in the second half of the year. The forecast indicates a further increase in supply, with around 20,000 completions planned for 2024-25.

Rental Trends: Some areas like Meydan, Arabian Ranches 3, and Al Furjan experienced minimal rental growth due to increased supply. However, popular communities like Dubai Silicon Oasis, Jumeirah Beach Residence (JBR), and The Greens/Views saw above-average rent increases due to limited availability and tenant movement. Average apartment, villa, and office rental rates increased by 6%, 3%, and 6% respectively over the quarter, and 21%, 23%, and 25% annually.

Sales Prices: Dubai’s sales price growth appears to be slowing down, with quarterly increases of 2% for apartments, 3% for villas, and 4% for offices. On an annual basis, changes stood at 14%, 15%, and 22% respectively. While the market continues to set new records in certain locations like beachfront areas and “desert destinations,” the growth rate has moderated, especially in the villa segment.

Abu Dhabi Real Estate Market:

Supply and Development: Around 1,400 apartments were added to the Abu Dhabi market during Q2 2023, with more expected to be delivered by the end of the year. These new supply units were primarily distributed across established International Investment Zones, particularly Al Reem Island and Saadiyat Island master plan communities. Additionally, new projects are in the planning and design stage, with announcements expected later in 2023 and early 2024.

Rental Trends: Rental rates for apartments and villas within prime and high-quality residential developments increased between 2% and 5% over Q2 2023. Prime villa communities on Saadiyat and Yas Islands experienced rental hikes of up to 10% compared to the same period last year. However, mid and low-end developments remained relatively stable.

Sales Prices: Sales prices for completed apartment developments in Abu Dhabi remained relatively stable over Q2, with an average annual increase of 1%. Average villa sales prices increased by nearly 2% during the quarter. High-end and established villa communities continued to outperform, with some achieving sales price growth closer to 6%. Prime and high-quality off-plan projects on Saadiyat and Yas Islands were well-received, with sales prices ranging between AED1,500 and AED3,800 per square foot.

Overall, UAE real estate markets showed resilience against rising interest rates and inflation, with various areas experiencing rental and sales price increases, while certain segments showed stability due to increased supply and competition.