The property boom has yet to cool off: Sales and rental prices in Dubai continued to rise in 1Q 2024, while seeing slower growth in Abu Dhabi, according to JLL’s latest UAE real estate market overview report (pdf).

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THE RESIDENTIAL MARKET-

Units got more expensive: Sale prices and rentals in Dubai each increased 21% y-o-y during the quarter. Abu Dhabi experienced less inflated price hikes, with sales prices increasing by 7% y-o-y, and rental rates by 4% y-o-y. Apartment rentals and sales prices for villas both surged 22% y-o-y, indicating robust demand for both types of properties.

Both emirates rolled out new units in 1Q 2024: Dubai saw 10k new units introduced in 1Q 2024, bringing its total stock to 729k units, while Abu Dhabi raised its stock count to 286k units on the back of 1.6k new units completed during the quarter. Another 25k are slated for handover in Dubai, while 6k units will be handed over in Abu Dhabi, by the end of the year, with rising land prices and construction costs edging developers towards secondary locations, the report adds.

We’re going to see more houses in the AED 2 mn range: Developers will begin to target properties within the AED 2 mn range in a bid to enable buyers to meet the threshold for eligibility for golden visa requirements in the UAE.

The two emirates saw transaction volumes increase, with Dubai seeing transactions rise 20% y-o-y and Abu Dhabi seeing a 17% y-o-y increase. Dubai also saw a 16% y-o-y rise in transaction value, while Abu Dhabi saw a 1% y-o-y drop, as apartment transactions outpaced those of villas and townhouses.

THE OFFICE MARKET-

Dubai upped workplace offerings in 1Q 2024, with some 17k sqm of new office space added, raising its stock to over 9.2 mn sqm. The emirate expects to see an additional 38k sqm of space go online in 2024 on the back of continued demand, with office vacancies in Dubai’s Central Business District (CBD) falling three percentage points to 8% during the period.

Rentals were also on the rise: Grade A rents in Dubai’s central business district increased by 22% y-o-y to AED 2.6k per sqm.

Abu Dhabi’s office supply remained stable at 3.94 mn sqm, though it has some 79k sqm scheduled for delivery by the end of the year. City-wide office vacancy rates stood at 22% during the quarter, while Grade A rents inflated by 14% y-o-y to a little over AED 2.k per sqm per year.

RETAIL AND HOSPITALITY-

Dubai’s retail sector also expanded: The emirate completed 12k sqm of retail gross leasable area (GLA) during the quarter — keeping total stock at 4.8 mn sqm — and expects to deliver 104k sqm of new retail space by the end of the year, focusing on smaller community malls as local brands look for alternatives amid limited space in prime super-regional malls. Abu Dhabi held retail stock still at some 3.2 mn sqm, but has 17k sqm of retail GLA in its pipeline within the year. City-wide vacancy dropped to 12% in Dubai and 21% in neighboring Abu Dhabi.

Dubai added nearly 2k new keys to its hospitality segment in 1Q 2024, bringing its total key count to 155k, while Abu Dhabi maintained supply at 32.5k keys. New hotel openings in Dubai primarily consisted of five-star launches in Business Bay, Za’abeel, and Port Saeed, and were driven by heightened tourism, with the emirate welcoming 3.67 mn visitors in 1Q, up 18% y-o-y. Dubai plans to introduce an additional 5k keys in 2024, while Abu Dhabi will roll out 500 keys during the same period.

Hospitality became slightly more profitable: Revenue per available room (RevPAR) in Dubai increased by 5% y-o-y to USD 185, on the back of a similar 5% y-o-y increase in average daily rates. In Abu Dhabi, RevPAR jumped by 17% y-o-y to USD 130, with daily rates increasing by 8% y-o-y. City-wide occupancy was down one percentage point from the same period last year at 82% in Dubai at the end of March, and stood at 81% in Abu Dhabi.

THE INDUSTRIAL MARKET-

Demand > supply in Dubai: Dubai saw robust demand against available supply, which spiked rental rates by 26% y-o-y in Jebel Ali Freezone (Jafza) to AED 365 per sqm annually, and by 5-7% y-o-y in older areas, such as Umm Ramool, Ras al Khor, and Al Qusais. JAFZA saw a notable 28% y-o-y increase in new Indian businesses during the quarter — a knock on effect of the trade agreement inked between India and the UAE in 2022.

Abu Dhabi also saw heightened demand for office space, partially owing to a spillover demand from Dubai due to the limited availability of vacant Grade A spaces. Musaffah posted the highest rent growth during 1Q, up 25% y-o-y, followed by a 6% y-o-y increase in the Industrial City of Abu Dhabi, and a 5% y-o-y increase in Kezad.

Plans to add more space: Jafza plans to welcome a 100k+ sqm Bharat Mart warehouse in2026 to promote Indian exports, and open a digital marketplace to enable global purchases. Dubai South and Aldar also kick-started a joint venture to develop a 24k sqm GFA Grade A logistics facility in Dubai South’s Logistics District, targeted for completion by the year’s end. Over in Abu Dhabi, Kezad plans to invest AED 621 mn to expand warehousing capacity by over 250k sqm by 4Q 2025.

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