The latest insights from JLL’s Q1 2024 UAE Real Estate Market Overview uncover strong activity. Demand remains strong throughout the market, with some noteworthy increases in both sale prices and new developments.
STEADY GROWTH IN THE UAE’S RESIDENTIAL SECTOR
The UAE’s residential real estate sector stood out as a key performer in the first quarter of 2024. Dubai alone welcomed around 10,000 new residential units, pushing the total stock to 729,000 units. Additionally, the market expects the delivery of another 25,000 units by the end of the year. Prime areas such as MBR City and Business Bay are leading the way in this growth. Abu Dhabi also saw steady growth, with 1,600 units completed and another 6,000 expected by the end of the year.
UAE DEVELOPERS SHIFTING FOCUS
Faraz Ahmed, research director at JLL MENA, observed a 20% rise in residential sales in Dubai and a 17% increase in Abu Dhabi. Land prices and construction costs going up mean developers are now eyeing secondary locations. They're primarily focusing on properties priced within the range of Dhs2m. This move helps buyers qualify for the Golden Visa. Sale prices and rentals in both Dubai and Abu Dhabi also surged, especially for apartments.
EXPANSION AND PERFORMANCE IN THE UAE’S HOSPITALITY SECTOR
The UAE’s hospitality sector has seen stable growth. Dubai's hospitality sector added nearly 2,000 new hotel keys in Q1 2024. High-end properties in Business Bay led this expansion. The emirate also anticipates adding another 5,000 keys throughout the year.
Conversely, Abu Dhabi's hotel supply remained stable, with an extra 500 keys expected. Both cities saw an increase in visitors, sustaining growth in average daily rates.
LIMITED SUPPLY AND STRONG DEMAND IN THE UAE’S OFFICE SECTOR
Dubai's office market experienced limited new supply, but strong demand persisted, particularly for fitted spaces. Abu Dhabi's office market remained stable, with 79,000 sqm of new space scheduled for the year. Rental rates surged in both cities, with Grade A rents in Dubai's CBD jumping by 22% YoY.
FOCUS ON COMMUNITY MALLS IN THE UAE’S RETAIL SECTOR
Prime malls in Dubai and Abu Dhabi are running out of space. So attention is turning to smaller community malls. Owners are upgrading these malls through refurbishments. They are also introducing experiential concepts to enhance the retail landscape. With the retail market in mind, Dubai saw 12,000 square meters of new retail space in Q1 2024 and expects another 104,000 square meters by the end of 2024.
STRONG GROWTH IN THE UAE’S INDUSTRIAL SECTOR
The industrial sector in the UAE experienced higher demand due to the new India-UAE trade agreement and the rise of e-commerce. Warehouse rents went up in key areas, especially in JAFZA, with significant yearly increases. Developers are teaming up to address the shortage in supply, reacting to the growing demand. In Abu Dhabi, the industrial sector also saw strong demand, leading to increased rental rates in major submarkets such as KEZAD and ICAD.
KEY TAKEAWAYS FOR THE FUTURE OF UAE REAL ESTATE
The UAE real estate market across all sectors is displaying robust growth, driven by strong demand and limited supply. This positive trajectory throughout the market suggests a promising future for the UAE's real estate market. Yet, the key question will be whether new supply can keep up with the current strong demand. If it does, the market is likely to see continued growth. But, a significant imbalance could lead to price corrections in some sectors.
