Is the real estate market in Dubai and Abu Dhabi still extraordinary financing? Both cities are showing strong signs and symptoms in the first quarter of 2024.

Dubai’s real estate market remained number one resilient through three months, even though Abu Dhabi’s residential sales market is showing promising signs and signs of progress within predictable destiny.

Dubai’s Real Estate Resilient In Q1; Abu Dhabi Residential Sales Promising

Dubai’s real estate market saw a strong start in 2024. During the first quarter, Dubai witnessed the addition of over 10,000 new housing units. These new homes included 7,300 apartments and 2,750 villas. 

This influx of new properties is significant because it shows the strong construction and development activities in the city. More homes mean more options for buyers and renters, contributing to the city’s vibrant real estate market.

The outlook for the rest of 2024 is promising. An additional 30,000 housing units are expected to enter the market by the end of the year. 

This continuous supply of new homes can help meet the growing demand from residents and investors. More properties also help stabilize prices, making homes more affordable for many people.

Rental Market Overview

Rental rates have shown mixed results. For the last three months, apartment and villa rental rates stayed mostly unchanged. However, growth rates have varied across different communities. Annually, growth rates have slowed to single digits. Villas saw a 6% increase and apartments a 10% increase.

Dubai Land Department (DLD) data shows a 4% drop in new contracts in Q1 2024 compared to the previous quarter and the same period last year. However, renewals increased by 5% quarter-on-quarter and 12% year-on-year. Many tenants agreed to above-average rental hikes.

Residential Sales Market Insights

Residential sales prices for both apartments and villas stayed relatively stable in Q1 2024, with some community-level differences. Annual growth rates were 6% for apartments and 8% for villas.

There has been a change in buyer preferences, with apartments in areas like Jumeirah Village Circle (JVC), Business Bay, Dubai Marina, and Downtown Dubai becoming more popular. 

Apartments often yield a higher Return on Investment (ROI). This is due to factors like lower initial costs, higher rental demand, greater occupancy rates, and shorter vacancy periods. The off-plan market was active, with high transaction values and volumes.

Abu Dhabi’s residential sales market shows promising growth. The city completed 800 residential units across various Investment Zones in Q1 2024. A significant portion was in Al Raha Beach.

The notable launch was Yas Canal, a new mega villa project in the same area. This project, expected to be completed by Q4 2027, aims to deliver 1,146 units for UAE nationals.

Also Read: UAE Real Estate: Tonino Lamborghini Announces Branded Residences On Rak’s Al Marjan Island

Rental Market Trends In Abu Dhabi

The rental market for villas and apartments in Abu Dhabi remained generally stable. Prime and high-end developments saw significant demand, leading to rental increases of 7% to 10% compared to last year, especially for new contracts.

During the first quarter, rental prices for both villas and apartments in Abu Dhabi stayed mostly stable. This stability provides renters with more predictable housing costs, which is essential for financial planning.

There was significant demand for prime and high-end developments in Abu Dhabi. This high demand led to rental price increases of 7% to 10% compared to the previous year, particularly for new rental contracts. This trend indicates that more residents are seeking luxury living options.

High-quality office space rental rates, which began to rise in 2023, continued to increase in 2024. Some developments saw rental increases of 5% to 7%, influenced by unit size and payment terms. 

The limited availability of premium office space, coupled with growing demand from expanding businesses, has contributed to the rise in rental rates.

The rise in office space rental rates is also driven by the expansion of businesses in Abu Dhabi. Many companies are looking to set up or expand their operations in the city, driven by government efforts to attract foreign investment. This growing demand for office space is a positive sign for the city’s economy.

Residential Sales Market Dynamics

Abu Dhabi’s residential sales market saw a significant increase in transactions in Q1 2024. Around 2,660 deals were recorded for apartments and villas, marking a 17% rise compared to the same period last year. 

Off-plan sales made up a substantial portion of these transactions, accounting for about 1,840 deals, or approximately 69% of the total, representing a 2% growth from the previous quarter. Apartment sales made up approximately 73% of total off-plan and nearly 78% of completed property transactions during this period.

While average apartment sales prices remained relatively unchanged, there was a notable surge in the upper and luxury segments on the Yas and Saadiyat Islands. Average villa sales prices increased modestly by 1% to 3% every quarter. However, year-on-year growth was more substantial, reaching 10% to 15%.

Northern Emirates 

The Northern Emirates market performed strongly in Q1 2024, indicating resilience and potential for sustained growth. Average apartment rental rates increased by 4% over the quarter and 9% annually. 

High-end properties saw more growth compared to typical units. Ras Al Khaimah led in rental rate escalation, followed by Sharjah and Ajman.

The real estate market in the Northern Emirates showed strong performance during the first quarter. This region’s resilience and potential for growth are evident from the increasing rental rates and high demand for properties.

The positive trend indicates that the Northern Emirates is becoming more attractive to both residents and investors. 

Archad Darbar Views

Archad Darbar, CEO of a leading real estate company, views this news positively. He believes the resilience and growth in Dubai and Abu Dhabi’s real estate markets demonstrate strong economic fundamentals and increasing investor confidence, predicting continued growth and stability for the sector throughout the year.

Conclusion

Both Dubai and Abu Dhabi’s real estate markets show promising signs as we move through 2024. Dubai’s market is buoyed by strong economic performance and a commitment to improving quality of life, which continues to attract skilled professionals and expatriates.

Abu Dhabi’s market is driven by new projects and stable rental demand, especially in prime and high-end developments.

The Northern Emirates and Al Ain also show growth potential, with stable rental markets and some areas experiencing significant rental rate increases. Investors and residents can look forward to a resilient real estate market in these regions throughout the year.