Dubai and Abu Dhabi saw property price gains in the opening months of 2024
The UAE real estate market continues to thrive with Dubai and Abu Dhabi both recording sales price and rent increases, according to CBRE Middle East’s Residential Market Review for the first quarter of 2024. Dubai villas saw the sharpest increase in sales prices with average prices climbing more than 22 percent year-on-year. However, in Q1 2024 apartments and villas in both Dubai and Abu Dhabi all saw positive price gains, said CBRE.
Dubai and Abu Dhabi real estate prices
In Dubai, price growth has continued to accelerate during the first quarter of 2024, with average prices increasing by 20.7 percent in the year to March 2024. Throughout this period, average apartment and villa prices increased by 20.4 percent and 22.1 percent, respectively. Although headline average sales rates are still marginally below the 2014 highs by 0.1 percent, several prominent residential neighborhoods have already surpassed their 2014 figures. As of March 2024, average apartment prices stood at AED1,486 ($405) per square foot, and average villa prices reached AED1,776 ($484) per square foot. Average villa sales rates are currently above their 2014 baseline by 22.9 percent.
Rental growth has also gained momentum in 2024, after a period of moderation in 2023. In March 2024, average residential rents registered a year-on-year increase of 21.2 per cent, up from the 20.4 per cent growth registered a month earlier. Over this period, average apartment and villa rental rates grew by 22.1 per cent and 14.5 per cent, respectively. Data from the Dubai Land Department revealed that, in the year to date to March 2024, the total number of rental registrations stood at 159,941, marking an increase of 5.8 per cent from the previous year.
As for supply, a total of 6,526 units were delivered in the first quarter of the year, with 59.7 percent of this supply being located in Meydan One, Jumeirah Village Circle, and Al Furjan. A further 46,086 are expected to be handed over the remainder of the year. However, given historic materialization rates, CBRE expects that a limited portion of this upcoming stock will come online as planned. March 2024 witnessed another record in Dubai’s residential market, with transaction volumes reaching the highest monthly figure on record, marking a year-on-year growth of 13.2 percent.
Throughout this period, off-plan sales and secondary market sales increased by 20.2 percent, and secondary market sales increased by 2.2 percent. In the first quarter of 2024, Dubai’s total transaction volumes reached 35,310. This is the highest total ever recorded in the first quarter of the year, marking an increase of 20.5 percent from the year prior. Over this period, off-plan transactions recorded an increase of 23.9 percent, and secondary market transactions rose by 15.2 percent. However, in Q1 2024, the total number of sales transactions within the prime market segment registered a decline of 2.1 percent compared to the year prior. Throughout this period, super-prime transactions recorded a drop of 16.5 percent year-on-year to stand at a total of 227.
These declines witnessed in both markets have been largely underpinned by significant declines in off-plan sales largely attributable to the high levels of demand for off-plan properties and the limited level of upcoming supply. In terms of performance, in the first quarter of 2024, average prime prices registered a year-on-year increase of 16 percent, standing at an average of AED4,661 ($1,269) per square foot, and average super-prime prices grew by 14.8 percent over this period, reaching AED4,978 ($1,355) per square foot.
Looking ahead, CBRE said it expects 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, the company analysts have forecast that residential rents will continue to increase. That being said, the rate of growth will likely moderate. In Abu Dhabi, during the first quarter of the year, the total volume of transactions stood at 2,795, registering a 22.6 per cent increase compared to the year prior. This increase has been underpinned by an 18.1 per cent rise in off-plan sales and a 34.5 per cent rise in secondary market sales.
In the year to Q1 2024, Abu Dhabi’s average apartment and villa prices increased by 4.3 percent and 2.3 percent, respectively. Abu Dhabi’s rental market witnessed a total of 46,130 residential rental contracts in Q1 2024, registering a decline of 10.9 percent from the year prior. This has been due to a 15.5 percent decline in the number of renewed rental contracts registered and a 2.4 percent drop in new rental registrations over the same period. In the year to Q1 2024, average apartment and villa rents have increased by 4.5 percent and 1.1 percent, respectively. On the supply front, only 80 units have been delivered in Abu Dhabi in the first three months of the year, with all of this new stock being in Al Raha Beach.
An additional 8,660 units are expected to be completed by year-end with 55.8 percent of this scheduled stock located in Yas Island, Al Sowwah, and Al Shamkha Taimur Khan, 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.”
