The UAE real estate market defied global headwinds in the third quarter of 2024, maintaining strong momentum and robust activity across all sectors. High transaction volumes and an upward trajectory underscore the market’s resilience, fueled by strong economic fundamentals.
According to JLL’s latest UAE Market Dynamics report, a surge in transaction volumes for off-plan properties, which recorded a 50.3 percent annual growth in Q3, set the pace for the upward swing in Dubai’s residential market with sales transactions rising 35.6 percent year-to-date.
“The UAE real estate market demonstrates remarkable resilience, achieving robust growth across all sectors despite a challenging global outlook. Investor confidence remains strong in both Dubai and Abu Dhabi, and this upward trajectory is expected to continue, driven by strategic government initiatives and the ongoing development of world-class destinations,” stated Taimur Khan, head of research MEA at JLL.
Dubai sees surging demand
Dubai reported the delivery of 7,400 units in Q3, with another 13,500 slated for Q4. Rent increases for apartments by 19.1 percent and villas by 12.5 percent reflect strong demand for quality accommodation in well-serviced communities. Moreover, as robust demand continued to outpace supply, lease renewals rose 14.1 percent, accounting for 62 percent of rental registrations. New supply is expected to stabilize rental rates in Q4, prompting developers to enhance existing communities and launch new master developments in secondary locations.
“We are seeing a clear flight-to-quality trend, with prime assets commanding premium prices. In Q4 2024 and beyond, we anticipate sustained growth with opportunities for both local and international stakeholders,” added Khan.
Abu Dhabi’s residential prices rise
In line with the UAE real estate market’s growth, Abu Dhabi’s residential market saw a 44.3 percent rise in secondary market sales in Q3, with apartment and villa prices up 8.5 percent and 8.1 percent year-on-year, respectively.
Rents also rose, with apartments up 9.3 percent and villas up 3.9 percent. However, off-plan sales declined 67.2 percent, impacting overall transactions, which fell 40.8 percent annually. The flight-to-quality trend will likely drive demand for prime properties in Q4, outperforming the broader market. Limited new supply entered the market in Q3, but 3,500 units are expected in Q4.
Quality commercial spaces see strong demand
The UAE real estate market is also witnessing a rise in demand for commercial spaces. Demand for prime and Grade A assets in Abu Dhabi’s occupier market drove a 10.8 percent annual increase in average rents in Q3 2024. In addition, rental registrations surged 44.4 percent with a 65.9 percent rise in new registrations.
Low vacancy levels and growing demand from both incumbent and new market entrants will likely boost growth in Q4 when 70,100 sq.m. of office space enters the total stock.
In Dubai, limited availability of Grade A office space is pushing rents higher, especially within the CBD where vacancy rates dropped to 5.2 percent. With such small availability, occupiers are reevaluating expansion plans, and are having to renew leases.
In addition, prime office rents rose by 8.3 percent, Grade A rents gained 14.7 percent, and Grade B rose 15.3 percent annually. Renewals also increased by 7.8 percent annually, compared to just 2.3 percent for new leases.
Surging tourism numbers drive hospitality growth
Abu Dhabi’s hospitality market is enjoying robust performance, driven by surging visitor numbers as the capital’s hotels welcomed 2.4 million guests from January to May 2024, especially at key destinations like Yas and Saadiyat Islands.
September saw impressive growth: occupancy was up by 7.1 percent, ADR rose 12.2 percent to AED527, and RevPAR went up 23.6 percent. Government initiatives, like the Abu Dhabi Tourism Strategy 2030, and upcoming events promise continued growth in Q4.
Dubai’s hospitality market also continues to trend higher. September saw a 2.7 percent year-on-year RevPAR increase, driven by rising tourism. Meanwhile, mega-developments like Marsa Al Arab and Dubai Islands promise to redefine luxury, and existing hotels are adjusting rates to maintain occupancy amidst price sensitivity. This is intensifying competition across all segments, pushing operators to elevate guest experiences and offerings. Despite global uncertainties, the sector remains dynamic and poised for continued growth.
