UAE Real Estate Market Thriving in 2024, New Asteco Q2 Report Reveals

Dubai's robust economy and appealing lifestyle continue to attract expatriates, according to the Asteco Q2 2024 real estate report. The city's strong fundamentals are driven by high equity in the real estate market, ongoing economic growth, infrastructure development, and a growing population.

The report also highlights that Abu Dhabi's real estate market is set for continued in 2024, supported by government initiatives and robust economic fundamentals. Meanwhile, the Northern Emirates are poised for sustained development, underpinned by strategic planning, attractive affordability, and increased investments.

Abu Dhabi Residential and Office Market

In Abu Dhabi, around 2,400 residential units were delivered in areas such as Noya on Yas Island, Jubail Island, Masdar City, and Al Raha Beach. Several residential and mixed-use projects are currently in the planning stages with public launches expected throughout 2024. This will further broaden Abu Dhabi's real estate landscape.

The rental sector in Abu Dhabi recorded strong activity, especially in upscale apartment and villa locations. Average apartment rents saw modest quarterly and annual increases of 1% and 2%, respectively. Villa rents maintained a steady performance with a 5% increase over the past year. Landlords in prime residential areas like Al Raha Beach, Saadiyat, Yas, and Al Reem Islands benefited from high demand and strong occupancy rates.

In Q2 2024, Abu Dhabi recorded 2,135 sales transactions with off-plan sales accounting for 57%. Apartments dominated both off-plan and ready sales segments with a 6.8% quarterly increase. Ready property transactions showed healthy growth at 2.8% quarterly and 33.1% annually. However, off-plan sales declined by 23.4% annually due to fewer project launches compared to the previous year.

The office rental market saw significant growth driven by private and corporate investments fuelling demand for high-quality office spaces. Grade A offices in prime locations experienced a substantial increase of around 10% compared to the previous year with robust quarterly growth ranging between 3% and 8%, especially for new contracts.

Dubai Residential and Office Market

In Dubai, approximately 6,750 residential units were completed in Q2 2024 despite a slower pace of new supply delivery compared to Q1 2024. Project launches continued robustly encompassing developments from single low-rise buildings to expansive master-planned communities. Asteco anticipates an additional delivery of about 25,000 residential units in the second half of 2024 though some may be delayed until 2025.

Apartment rental rates recorded quarterly increases of 3%, while villa rentals rose by 2%. Annual rental growth moderated to single digits with apartments seeing an 8% increase and villas a 4% rise. This uptick is attributed to the revised RERA rental index allowing landlords larger rent increases upon lease renewal.

The office rental market thrived particularly for Grade A space driven by robust demand and limited supply. The upward pressure on rents is expected to persist until new supply enters the market or business conditions change.

The sales market remained strong driven by ongoing project launches boosting off-plan transactions. While Q2 recorded a steady 2% growth in average sales prices several areas including Jumeirah Village and Business Bay experienced above-average price growth due to increased demand and superior quality of new developments.

Al Ain and Northern Emirates Market

During Q2 2024 tenant migration from Dubai to the Northern Emirates increased due to factors like lower rental rates improving standards of development enhanced infrastructure and flexible working arrangements.

Asteco observed greater rental growth for typical apartments compared to high-end properties across the Northern Emirates. The sales market maintained high activity levels over Q2 with a steady flow of project launches.

Al Ain's residential rental market maintained positive momentum throughout the most recent quarter with stable apartment rental rates both quarterly and annually especially for well-maintained properties. Similarly villa prices held steady compared to the previous quarter with a year-on-year increase of 2%.

"The off-plan property market continued to maintain remarkable momentum with both local and international investors eagerly acquiring newly launched units attracted by the promise of strong returns on investment in a tax-friendly environment," said Asteco's report.

Lenders started offering enhanced financing options for off-plan properties allowing buyers up to an additional 10% funding during construction typically available for projects with at least half construction progress ensuring risk mitigation for lenders stimulating the off-plan market broadening accessibility for potential buyers.