UAE property market posts robust growth in first quarter

The real estate market activity in Abu Dhabi and Dubai remained strong in the first three months of 2022 on the back of a string of government initiatives, economic growth, and improved market sentiment, market analysts said.

Across Abu Dhabi’s residential and office market, around 3,800 residential units were delivered in Q1 2022, spread across different areas of Abu Dhabi including Al Raha Beach, Al Reem Island, Yas Island and Saadiyat Island and several other residential areas, according to property market experts at Asteco, a leading property management firm.

Numerous residential and mixed-use projects located within the Investment Zones are expected to start construction in 2022 and a large majority of Abu Dhabi developers are now considering developing new residential and mixed-use projects in different areas of Abu Dhabi as a result of the generally positive market sentiment, Asteco analysts said in a report.

Average villa rental rates grew by two per cent in Q1 2022, with some developments recording increases of close to 10 per cent. Average annual increases stood at five per cent.

In Dubai, the new apartment supply picked up significantly in the first quarter of 2022 with the handover of 6,250 units, compared to less than 4,000 in the previous quarter. However, the villa market lagged behind considerably with only 250 units completed and handed over.

The report also indicated that the new supply for 2022 in Dubai is likely to fall short of earlier estimates. Delivery is now expected to reach a total of 29,000 apartments and 3,250 villas by year-end, with several projects likely to be delayed and to spill over into 2023.

“New supply — current, and future — is scattered throughout Dubai with deliveries in established communities, such as Dubai Marina and Business Bay, as well as in upcoming developments including Port De La Mer, MBR City, Dubai Hills Estate, Damac Hills 1 and 2. New project launches (off-plan, under construction, and completed developments) continued to be well received by investors and end-users,” said the report.

In Dubai, villas continued to be the predominant focus of demand, and the limited number of new handovers translated into higher rental and occupancy rates. Annual rental growth in the villa market was rather significant at 25 per cent, while average apartment rental rates rose by 14 per cent.

Office rental rates also grew by 4.0 per cent on average over the last three months, although net effective rents may have been influenced by additional incentives. Annual changes stood at 6.0 per cent, Asteco said.

“The positive benefits of Expo 2020 will no doubt be felt across a wide range of sectors for many years. The tangible benefits resulting from infrastructure upgrades and the repurposing (legacy) of the site for start-up companies is apparent. However, perhaps the most important legacy will be in the new business partnerships created, increased tourism, and the refocusing of Dubai towards the Digital Economy, not to mention, the continuing strides Dubai is making to facilitate this transition,” said the report.

District 2020 will retain more than 2.8 million sqft of Gross Floor Area of Leed Gold and Platinum structures from Expo 2020 Dubai. These will be transitioned in phases into residential, commercial, and cultural neighbourhoods, with a population of 145,000 at full capacity. In addition, 108 serviced land plots of residential, hospitality, commercial, and mixed-use will become available for sale at a later date. The total GFA planned for build out is 28 million.

Apartment rental rates across the Northern Emirates improved marginally with average increases of 2.0 per cent over Q1 2022 and 1.0 per cent annually.

Sharjah office rental rates, for the first time in nearly five years, recorded positive quarterly and annual growth of 3.0 per cent on average. Nonetheless, landlords will continue to offer incentives in the form of rent discounts and flexible payment terms.

Sales transaction activity in Sharjah, as well as Ajman, remained strong, particularly pertaining to the villa market. Sharjah apartment sales prices remained more or less unchanged over the last quarter and annual increases averaged 8.0 per cent.

The real estate market in Al Ain remained relatively stable over the last six months with modest improvements in demand and activity across all sectors, Asteco said.

— issacjohn@khaleejtimes.com