Fresh data out on the real estate sector in 1Q 2024 points to a slightly slower growth rate in both rentals and sales prices in Dubai, along with promising signs of growth in Abu Dhabi and the northern emirates.

DUBAI-

The report paints a different picture of Dubai’s property market during the quarter: Annual growth rates in Dubai’s rental market slowed to single digits in 1Q 2024, with villa rental rates growing 6% y-o-y and apartments at 10% y-o-y, according to a report by property management firm Asteco picked up by Trade Arabia. The leasing market saw a 4% y-o-y drop in new contracts, while renewals grew 12% y-o-y.

Sales prices also saw growth levels unchanged from the same time last year for both apartments, which saw 6% y-o-y growth, and villas, with 8% y-o-y growth, the report adds.

ICYMI #1- Earlier data from JLL and CBRE pointed to higher growth in sales prices and rentals, with JLL pegging the growth of both at 21% y-o-y, and CBRE estimating a similar 20.4% y-o-y increase in sales and 21% y-o-y increase in rentals.

Buyer demand shifted to more established communities,including Jumeirah Village Circle, Business Bay, Dubai Marina and Downtown Dubai, which gained more traction. The off-plan market also comprised the largest market share in both value and transaction volume. Apartments were favored during the quarter, with 7.3k handed over, compared to little below 2.8k villas out of a total of 10k units delivered.

An additional 30k units are slated for handover in Dubai in 2024, representing a “significant increase compared to the previous quarter,” the report adds. JLL’s report forecasted some 26k additional unit deliveries this year, down 4k from Asteco’s estimate, while CBRE sees 25k new units.

ABU DHABI-

Rental rates hiked up in neighboring Abu Dhabi: Abu Dhabi saw rentals inflate 7-10% y-o-y for prime/high-end developments, owing to “significant demand,” particularly for new contracts – a higher figure than JLL’s 4% estimate and Abu Dhabi’s 4.5%. Rental rates for office space also increased 5-7% y-o-y on the back of limited supply against heightened demand.

Abu Dhabi rolled out 800 new units in 1Q to meet increased demand, focusing on Al Raha Beach. The emirate is currently working on a Yas Canal villa project, which will offer over 1.1k units exclusively for Emiratis in 4Q 2027. JLL had estimated some 1.6k new units completed in Abu Dhabi during the quarter.

Abu Dhabi saw some 2.7k transactions during the quarter, up 17% y-o-y, with off-plan sales comprising 69% of total transactions. Apartments accounted for 73% of off-plan sales, and 78% of total completed sales.

Sales prices were also up: Upper and luxury segments on Yas and Saadiyat Islands saw notable surges, with villa prices up 10-15% y-o-y.

THE NORTHERN EMIRATES-

A first look at rental rates in the northern emirates: Rental rates across the northern emirates increased 9% y-o-y in 1Q, with high-end developments experiencing more pronounced growth. Ras Al Khaimah led the race in rental increases, followed by Sharjah and Ajman. Rates remained relatively flat in Al Ain across all asset classes, with the exception of an 8% y-o-y increase in rental prices for high-quality villas.

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Villa capital gains are expected to hit a ten-year high this year, while apartment prices could hit new records, Haider Tuaima, director and head of real estate research at ValuStrat, told Zawya. Apartment prices are forecast to grow at a slower pace than villa prices, having only gained traction in 2H 2023, while villa prices have doubled since pandemic levels, and surpassed peak prices of 2014.

April numbers: Villa capital gains rose 31.2% y-o-y in April, with villas seeing a valuation of over AED 2k per sqft for the first time in 10 years. Palm Jumeirah logged the highest villa price increase at 40.1%, followed by Jumeirah Islands (39.5%), Dubai Hills Estate (36.2%), Green Community West (31.4%), and Emirates Hills (31.1%). Apartment prices increased 21.3% y-o-y.

Growing supply + buyer affordability could slow things down: An anticipated 64.4k new residential units by the year’s end “could lead to a market correction, but only if all under-construction projects are completed on schedule, which hasn’t been the case so far,” Tuaima said. The stabilization of villa rentals over the past six months signals that “tenants can no longer afford significant rent increases,” with many turning to mortgages amid rental highs, Tuaima added.

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