JLL, the company specialized in real estate and investment management, issued its latest report on the performance of the real estate market in the UAE during the first quarter of 2024. According to the report, the residential market in Dubai witnessed a strong start in the new year, with about 10,000 residential units completed. During the first quarter of the year, the total supply rose to 729,000 units.
The remaining months of the year are scheduled to witness the delivery of an additional 25,000 units in Dubai, most of which are residential apartments in distinct areas such as Mohammed bin Rashid City, Business Bay, Jumeirah Village and Dubailand. In Abu Dhabi, the emirate has witnessed steady completion rates with the delivery of 1,600 housing units and it is expected that 6,000 units will be added by the end of the year.
Faraz Ahmed, Director of Research at JLL Middle East and North Africa, said: “The residential units sector continued to achieve strong levels of growth during the first quarter of the year, as the volume of residential unit sales transactions in Dubai increased by 20% compared to the volume of transactions in the same period from last year, while Abu Dhabi witnessed an increase of 17% with an increasing demand for residential apartments compared to villas and townhouse units.”
In Dubai, sales and rental prices recorded annual increases of about 21%. Apartment rents recorded a significant annual increase of 22%, exceeding the growth rate of villa rents of 14%. While demand for villas remained strong, with a significant increase of 22% in sales prices compared to last year.
In Abu Dhabi, sales prices increased by an average of 7%, while rental prices increased by an average of 4% during the same period. Similar to Dubai, apartments in Abu Dhabi recorded a 5% increase in rents compared to villas, while the selling prices of villas in Abu Dhabi increased by 9% compared to last year.
Tourism Activity
During the first quarter of the year, Dubai witnessed the opening of a number of new hotels, most of them five-star hotels, in distinct areas such as Business Bay, Zabeel and Port Saeed. These hotels added about 2,000 rooms, bringing the total number of rooms to 155,000 rooms.
It is expected that another 5,000 four-star and five-star rooms will be added in the emirate during the rest of the year. In contrast, hotel supply in Abu Dhabi remained relatively stable at 32,500 rooms, with an additional 500 rooms expected to be added during the year.
Office Spaces
During the first quarter of the year, the office space market in Dubai witnessed the completion of a limited number of office projects, which added about 17,000 square meters, bringing the total supply in this market to more than 9.2 million square meters. About 38,000 square meters of office space is expected to be delivered during the remainder of the year.
It is expected that the implementation of expansion plans in existing free zones and previously announced commercial development projects will gradually contribute to alleviating the pressure on supply in the long term. In the capital, Abu Dhabi, supply remained stable at 3.94 million square meters during the first quarter, and an area of 79,000 square meters is scheduled to be added during the rest of the year.
As a result, office space rents in Dubai and Abu Dhabi rose significantly in the first quarter of 2024, with average Class A rents in the Dubai Central Business District increasing by 22% compared to last year, recording 2,600 dirhams per square meter annually.
The significant increase in leasing activity led to a decline in the vacancy rate within the central business district from 11% last year to 8% this year. Likewise, average Class A rents in Abu Dhabi city increased by 14% during the same period, recording 2,045 dirhams per square meter annually, while the vacancy rate in the capital stabilized at 22%.
In the first quarter, approximately 12,000 square meters of gross leasable retail space was completed in Dubai, bringing the current total supply largely unchanged at 4.8 million square meters.
It is expected that approximately 104,000 square meters of retail outlets will be completed during the rest of the year. On the other hand, the capital has not witnessed the completion of any major retail projects, but it is expected that about 17,000 square meters of retail space will be completed during this year.
Industrial Areas
The new trade agreement signed by India and the UAE, along with the development of a warehouse facility under the name “Bharat Mart”, has contributed to Jebel Ali Free Zone (Jafza) maintaining its position as an established free zone for international trade in the UAE. Rents for storage facilities in Jafza witnessed a significant annual increase of 26%, bringing the average rent to 365 dirhams per square meter annually.
Developers have recognized the growing demand for high-quality industrial facilities and are aggressively seeking to fill the supply gap through partnerships such as the one between Dubai South and Aldar Properties to develop the logistics park in Dubai South. The industrial market in Abu Dhabi witnessed strong demand rates in the first three months of 2024.