MAYS IBRAHIM (ABU DHABI)
The UAE's real estate sector continues to thrive, driven by strong macroeconomic fundamentals and a burgeoning non-oil economy, according to the latest UAE Real Estate Market Review for Q3 2024, published by CBRE, a leading global real estate services firm.
The report highlights significant growth in both the residential and commercial property markets, fuelled by consistent foreign investment and an increasing demand for quality real estate.
The UAE's GDP is projected to expand by 3.7 percent in 2024, with further growth anticipated at 5.0 percent in 2025 and 5.1 percent in 2026, on the back of non-oil sectors, according to the report.
It cited data by Oxford Economics, which forecasts an average growth rate of 4.4 percent from 2024 to 2027, contrasting with a weaker global economic outlook.
Abu Dhabi Office Market
In Abu Dhabi, the office market remained resilient into the third quarter, with rental registrations climbing compared to the same nine-month period last year.
The increase is largely attributed to a surge in new rental contracts, although renewals have seen a surprising decline.
The report indicates that this decline may correlate with a spike in lease expirations, prompting tenants to seek new leases.
Average occupancy rates for assets monitored by CBRE rose to over 94 percent during Q3 2024, up from around 91 percent a year earlier, while prime office rentals experienced significant increases, with Grade A assets witnessing an 18 percent year-on-year rise.
The report also revealed that the professional services sector, particularly international law firms, is making a notable return, enhancing the demand for office space in Abu Dhabi.
Dubai Office Market
Dubai's office market mirrors this positive trend, propelled by a vibrant non-oil economy that is generating new employment opportunities.
However, the supply of new office spaces is limited, leading to increased competition among tenants and driving up rental prices.
The average occupancy rate for institutional-grade assets climbed to approximately 93 percent, compared to 92 percent a year prior, the report showed.
It added that the ongoing demand for office space resulted in substantial rental growth across various grades. Prime rates rose by 11 percent, while Grade A, B, and C rates saw increases of 21 percent, 24 percent, and 19 percent respectively.
Residential Market Insights
Abu Dhabi recorded nearly 2,000 residential sales transactions in Q3 2024, a significant 40 percent drop year-on-year, primarily due to a decrease in off-plan sales.
Conversely, sales of ready properties surged by 45 percent.
Average apartment prices rose by nearly 9 percent, reaching Dh12,000 per square metre, while villa prices increased by over 8 percent, now averaging Dh10,500 per square metre.
In Dubai, the residential market delivered a solid performance during Q3 2024 with average prices soaring nearly 20 percent compared to last year.
"This increase has been underpinned by a 19 percent rise in average apartment prices and a 23 percent increase in average villa prices, with average apartment and villa values reaching Dh1,610 per square foot and Dh1,980 per square foot, respectively," the report stated.
Jumeirah Bay Island emerged as a premium destination among both the apartment and villa segments of the market, with average apartment rates reaching Dh11,841.
Hospitality and Retail Performance
The report revealed that the hospitality sector in Dubai is set for record visitor numbers, with over 10.6 million overnight visitors recorded in the first seven months of 2024.
The city aims to attract between 23 to 25 million visitors by 2025.
The number of hotel guests in Abu Dhabi surged to nearly 2.9 million in the six months to June 2024, registering a 20 percent year-on-year growth.
"Over this period, the number of international visitors in Dubai increased by 9.9 percent, reaching a total of 8.12 million," the report said.
The retail market is also experiencing strong demand, especially in prime locations where vacancy rates are low.
Rental rates are rising, with average rates in Abu Dhabi up by over 8 percent year-on-year.
Dubai follows closely, with rates increasing by about 3 percent, reaching approximately Dh500 per square foot.