Abu Dhabi,6 August 2024–According to the Asteco Q22024 real estate report, Dubai’s strong economy and attractive lifestyleremain major draws for expatriates. Dubai’sunderlying fundamentalsare robust, driven by high equity in the real estate market, continuedeconomic growth, infrastructure development and a growing population.

The report also highlights that Abu Dhabi’s real estate market is set for continued growth in 2024, supported by government initiatives and robust economic fundamentals. Meanwhile, the Northern Emirates are poised for sustained development, underpinned by strategic planning, attractive affordability, and increased investments.

Abu Dhabi Residential and Office Market

According to the report, the Abu Dhabi market saw the delivery of around 2,400 residential units, particularly in Noya on Yas Island, Jubail Island, Masdar City, and Al Raha Beach. Several residential and mixed-use projects are currently in the planning stages, with public launches expected throughout 2024, further broadening Abu Dhabi’s real estate landscape.

In the rental sector, the market continued to record strong activity, particularly in upscaleapartment and villa locations. Average apartment rents saw modest quarterly and annualincreases of 1% and 2%, respectively. Villa rents maintained a steady performance, reflecting a 5% increase over the past 12months. Landlords in Abu Dhabi’s prime residential areas, particularlyin waterfront communities such asAl Raha Beach, Saadiyat, Yas, and Al Reem Islands, benefited from strong occupancy rates and high demand, with some properties even having waiting lists.Comparable mid-end properties in prime investment areas experienced annual growth of over 5%. Properties at the lower end ofthe marketexhibited stability, primarily due to landlords offering attractive lease termsto entice tenants.

 The market also saw a steady influx of private and corporate investments, fuelling demand for high-quality office spaces, and leading to significant rental growth. Grade A offices in prime locationsexperienced a substantial(circa 10%) increase compared to the previous year, with robust quarterly growth rangingbetween 3% and 8%, especially for new contracts.

In Q2 2024, Abu Dhabi recorded 2,135 sales transactions, with off-plansales accounting for 57%. Apartments dominated off-plan and ready sales, comprising 85% and 75% of their respective segments, and experienced a 6.8% quarterly increase. Ready property transactions showed healthy growth at 2.8% quarterly and 33.1% annually. However, off-plansales declined by 23.4% annually due to fewer project launches compared to the previous year. Apartment sales prices continued their upward trend with average quarterly and annual growth rates of 4% and 5%, respectively.

Dubai Residential and Office Market

The report indicates thatin Q2 2024, the pace of newsupply delivery decelerated compared to Q1 2024, with approximately6,750residential units completed.Project launches, however, continued at a robust pace,encompassing a wide array of developments from singlelow-rise buildings and skyscrapers to expansive master-planned communities.Looking ahead, Asteco anticipates the delivery of an additional25,000 residential units in the second half of 2024, thoughsome may be delayed until 2025.

While apartment and villa rental rates recorded quarterly increases of 3% and2%, respectively, annual rental growth moderated to single digits, withapartments seeing an 8% increase and villas 4%. This uptick is primarily attributed tothe revised RERA rental index, which permits landlordsto implement larger rent increases upon lease renewal.

The office rental market continuedto thrive, particularlyfor Grade A space, driven by robust demand and limitedsupply. The upward pressure on rents is expected to persistuntil new supply enters the market or business conditionschange.

The sales market in Dubai remainedstrong, driven by ongoing project launches that boost off-plan transactions. While Q2 2024 recorded a steady 2% growth in averagesales prices, several areas,including Jumeirah Village and Business Bay, experiencedabove-average sales price growth. This is attributed to a general increase in demand and in part to a significant rise in both off-plan launches and newly completed developments.These new projects often feature superior quality compared to earlier onesin these areas and are priced accordingly.The off-plan property market continuedto maintain remarkable momentum, with both localandinternational investors eagerly acquiring newly launched units, attracted by the promiseof strong returns on investment in a tax-friendly environment.

Additionally, some lenders started offering enhanced financing options for off-plan properties, allowing buyers to secure up to 10% more funding during construction. This additional funding is typically available for projects with at least 50% constructionprogress, ensuring a degree of risk mitigation for the lender. This move not only stimulatesthe off-plan market but also broadens accessibility to potential buyers.

Al Ain and Northern Emirates Market

During Q2 2024, the Northern Emirates noted an increase in tenant migration from Dubai due to several factors, such as lower rental rates, improving standards of development, enhanced infrastructure,and the adoption of more flexible and hybrid working arrangements.

Asteco observed greater rental growth for ‘typical’ apartments compared to high-end properties acrosstheNorthern Emirates. The sales market maintained a high level of activity over Q2 2024, with a steady flow of project launches.

Al Ain’s residential rental market maintained its positive momentum throughout the most recent quarter. Apartment rental rates remained stableboth quarterly and annually, especially for well-maintainedproperties. Similarly, villa prices held steady compared to the previous quarter, with a 2% year-on-year increase.

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About Asteco:

Asteco is a major regional and international award-winning full-service real estate services company that was formed in 1985 and has gained enormous respect for consistently delivering high quality, professional, value-added real estate services in a transparent manner. The company is widely recognised for its involvement with many of the projects that have defined the landscape and physical infrastructure of the United Arab Emirates.

The world-class company has a distinguished and important combination of local knowledge and international expertise and has been renowned for its application of the latest technological tools and innovations, its commitment to transparency, winning strategies, and human expertise.

Undisputed Real Estate experts with a regional presence to serve its customers, Asteco proudly represents a significant number of the region’s top property Owners, Developers, and Investors.

Asteco offers a wide range of services and solutions to its clients from Valuation Advisory and Building Consultancy, Property Management as well as Sales & Leasing services. The company applies innovative solutions and cutting-edge technology to add tangible value for its clients at every stage of the property lifecycle and to continuously elevate customer experiences.