ABU DHABI — The United Arab Emirates’ (UAE) real estate market has experienced a remarkable surge in the second quarter of 2023, particularly in off-plan sales transactions in the residential unit markets of Dubai and Abu Dhabi. This growth is attributed to renewed investor confidence and a high demand for recently launched projects.
Dubai’s residential market
According to data from the Dubai Pulse digital platform, off-plan sales of residential units in Dubai saw a significant increase of 38 percent in value and 30 percent in terms of number compared to the same period last year.
Most transactions (57 percent) were recorded in units priced between US$ 136,000 and US$ 540,000. Investors primarily focused on studio and one-bedroom units in sought-after areas such as Jumeirah Village Circle, Dubailand, and Mohammed Bin Rashid City.
The UAE Real Estate Market at a Glance Dubai's Residential segment: * 38% increase in off-plan sales value in Q2 2023. * Focus on studio and one-bedroom units in prime areas. * 7,300 new units delivered; 21,000 more scheduled. * Sales prices up 16%; rents rose 24% in May 2023. Abu Dhabi's growth: Off-plan sales value doubled to $1 billion in Q2 2023. 1,000 new units entered the market; 3,000 more planned. Slight 1% increase in both sale and rent prices. Office Space boom: * Strong demand in Dubai and Abu Dhabi. * 18% increase in average rents in Dubai's Central Business District. * 11% increase in Abu Dhabi's average rents. * Shared office space and serviced offices in high demand. Outlook: * 99,000 square meters to be completed in Dubai. * 41,000 square meters in Abu Dhabi. * Steady growth expected to continue. Source: Digital Pulse
The residential market also witnessed the delivery of 7,300 units in Dubai during Q2, bringing the total supply to 700,000 units. An additional 21,000 units are scheduled for delivery in the second half of the year.
Sales prices in Dubai’s residential units market increased by 16 percent, and rents rose by 24 percent in May 2023 compared to last year, according to a report by Jones Lang LaSalle (JLL).
Abu Dhabi’s performance
In Abu Dhabi, the off-plan sales market continued its robust performance, with the value of transactions more than doubling from US$ 490 million in Q2 2022 to US$ 1 billion in Q2 2023. Activity was mainly concentrated in units priced between US$ 540,000 and US$ 820,000, driven by villa transactions on Al Reem Island and Yas Island.
The capital also saw the entry of 1,000 units into the market, increasing the total supply to 283,000, with about 3,000 units planned for delivery in the remaining months of the year.
Both sale and rent prices in Abu Dhabi rose slightly by 1 percent each, reflecting a trend likely to continue as demand shifts towards new islands opening soon.
Office space market
Dubai’s office space market continues to generate strong demand, attracting a diverse mix of tenants. With limited availability of high-quality office space and an increasing number of companies entering the market, shared office space and serviced offices have become the initial choice for most new companies.
Average rents for Class A office space in Dubai’s Central Business District increased by 18 percent, reaching US$ 626 per square meter per annum in Q2, while the district’s vacancy rate was 10 percent.
In Abu Dhabi, demand for Class A office space continued to rise, resulting in average rents increasing by 11 percent, recording US$ 517 per square meter annually.
The demand for shared office space and serviced offices remained resilient as companies continued to follow mixed business models, combining work from the company’s headquarters and remote work.
Looking ahead
The second half of 2023 is expected to witness the completion of about 99,000 square meters in Dubai and 41,000 square meters in Abu Dhabi. The steady growth in both residential and office space markets reflects a strong and resilient real estate sector in the UAE.
Investors, tenants, and real estate professionals are closely watching these trends, as the UAE continues to solidify its position as a leading global real estate hub. The current momentum is likely to carry into the coming quarters, driven by strategic investments, innovative projects, and a favorable economic climate.