UAE’s Housing Market Growth Accelerating

UAE’s Housing Market Growth Accelerating

Are you considering making an investment in real estate or moving to the United Arab Emirates (UAE)? There is an incredible boom in the housing marketplace in the UAE. The rent and sales costs are on the rise.

This growth is supported by strong demand, healthy economic facilities, and a great foreign interest. In this article, you will find about the elements contributing to this growth and what it means for investors and residents.

UAE’s Housing Market Growth Accelerating

In the first quarter of 2024, Dubai’s residential sector showed robust growth. Sale prices and rentals in Dubai both saw around 21% annual increases. This reflects the high demand for properties in the city.

Dubai’s all-residential property price index (RPPI) increased by 20.71% year-on-year (y-o-y) in Q1 2024. This follows annual increases of 20.14% in 2023, 9.53% in 2022, and 9.25% in 2021. These figures indicate a steady upward trend in property prices over the past few years.

Different types of properties in Dubai have seen varying levels of growth. Apartment prices surged by 20.43% y-o-y in Q1 2024, accelerating from the previous year’s 12.4% growth. Quarterly, apartment prices increased by 6.2%.

Villa prices saw an even sharper rise, increasing by 22.08% y-o-y in Q1 2024, following a 14.82% growth in the prior year. Quarterly, villa prices rose by 5.35%.

By the end of 2023, the average purchase price of apartments in Dubai was AED 1,500,000 (approximately USD 408,386). The average purchase price of villas stood at AED 3,200,000 (approximately USD 871,222).

UAE’s Housing Market Growth Accelerating

Abu Dhabi: Steady Growth

Abu Dhabi’s housing market has also been growing, though at a more moderate pace compared to Dubai. The all-residential property price index in Abu Dhabi rose by 7.53% y-o-y in Q1 2024. Every quarter, prices were up by 2.45%.

Apartment prices in Abu Dhabi increased by 6.42% y-o-y in Q1 2024, a significant improvement from the 1.22% growth in Q1 2023. Quarterly, apartment prices increased by 2.37%.

Villa prices rose by 12.97% y-o-y in Q1 2024, compared to a 1.19% increase a year ago. Quarterly, villa prices were up by 2.81%.

Also Read: Pulse Beachfront, Dubai South

Demand Surge: A Record Year For Transactions

The demand for properties in the UAE remains strong. In Dubai, registered sales transactions reached a record 133,134 deals in 2023, up by 38% from the previous year. Abu Dhabi also saw a record high in transactions, with 13,298 units sold in 2023, a 75% increase from the previous year.

This strong demand has continued into 2024. In Q1 2024, Dubai’s residential sales transactions increased by 16% in value and 20% in volume compared to the same period last year. In Abu Dhabi, while the value of sales transactions fell slightly by 1%, the volume surged by 17%.

Economic Growth Supports The Housing Market

The UAE’s strong economic performance is a key factor supporting the housing market’s growth. The country’s economy grew by around 3.1% in 2023, driven by robust domestic consumption. 

The International Monetary Fund (IMF) projects that the UAE economy will grow by 4% in 2024, while the UAE central bank expects a slightly higher growth rate of 4.2%.

The UAE is one of the wealthiest countries globally, with a GDP per capita of USD 92,073 in 2023. This economic strength provides a solid foundation for the housing market’s continued growth.

A Brief History Of The UAE Housing Market

Dubai’s property market has experienced various cycles of growth and contraction over the years. From 2002 to 2008, property prices nearly quadrupled, driven by foreign investment and ambitious mega-projects like Palm Jumeirah and The World.

However, the global financial crisis in 2008 caused a significant downturn, with many projects put on hold or canceled.

The market began to recover in 2012, with prices rising until 2014. However, another slowdown followed due to factors like the introduction of a Federal Mortgage Cap, the implementation of a 5% value-added tax (VAT) in 2018, and the impact of the COVID-19 pandemic.

The housing market started to rebound in 2021, and this recovery has continued into 2024. Dubai house prices rose by 9.25% in 2021 and by another 20.14% in 2023. Abu Dhabi also saw growth, though at a more moderate pace, with prices increasing by 1.56% in 2021 and 4.96% in 2023.

Foreign investment plays a significant role in the UAE’s housing market. In 2019, the UAE introduced a new system for long-term residence visas, allowing foreign investors and professionals to live, work, and study in the country without needing a national sponsor.

These visas are issued for 5 or 10 years and are renewable. Foreigners can also enjoy 100% ownership of their business

Housing Supply: Keeping Up With Demand

Despite the high demand, the UAE has managed to keep up with the housing supply. In Dubai, around 39,000 new residential units were completed in 2023, following the completion of 41,000 units in 2022 and 44,000 units in 2021. This brought the total housing stock in Dubai to 719,000 units by the end of 2023.

In Abu Dhabi, around 5,000 units were added to the market in 2023, bringing the total housing stock to 284,000 units. Projections for 2024 indicate that around 35,000 new units will be completed in Dubai and 8,000 units in Abu Dhabi.

In Dubai, gross rental yields averaged 7.24% in April 2024. By property type, apartments had rental yields of 7.66%, while villas had yields of 5.59%.

In Abu Dhabi, gross rental yields averaged 6.46% in April 2024, with apartments yielding 6.82% and villas yielding 5.31%.

In Dubai, rental rates for all residential units increased by 20.75% in April 2024 from a year earlier. Apartment rents surged by 21.79%, while villa rents increased by 13.12%.

In Abu Dhabi, the average rental rate for all residential units increased by 8.49% y-o-y in April 2024. Apartment rents rose by 9.24%, while villa rents increased by 4.84%. The government’s supportive policies and initiatives further enhance the market’s attractiveness to investors and residents alike.

UAE’s Housing Market Growth Accelerating

Arshad Darbar’s Thought

Arshad Darbar, a real estate expert with years of experience, likely views this news realistically. He analyzes the impact on property values, market demand, and investment opportunities. If the news involves regulatory changes or economic indicators, he considers the effects on developers, investors, and homeowners

Arshad takes into account the broader context, including macroeconomic trends, demographic shifts, and urban development plans. He offers strategies for adapting to changing market conditions, identifying new opportunities, and mitigating risks.

Arshad’s deep understanding of the real estate industry enables him to provide informed assessments and actionable advice to his clients and colleagues.

Conclusion

The UAE’s housing market is experiencing significant growth, driven by robust demand, economic strength, and foreign interest. Whether you are an investor looking for attractive returns or someone considering relocating, the UAE offers a dynamic and promising housing market.

With the government’s policies and initiatives supporting the market, the market has become even more attractive to both investors and residents.

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