The UAE’s real estate market is expected to sustain its growth trajectory well into 2H 2024, backed by a resilient economy, supportive government policies, and growing demand, according to Kuwait Financial Centre’s (Markaz) latest report(pdf). The report cited the UAE’s revised golden visa requirements among the factors expected to boost the property sector and draw international investment to the country’s real estate.

How did the UAE fare on Markaz’s index? The Emirates maintained a score of 3.7 on the Markaz Real Estate Macro Index, reflecting a positive outlook for the year. With a top score of 5, the index uses key economic indicators, such as oil and non-oil GDP growth, inflation, and job creation, to gauge the state of the real estate market.

THE OFFICE MARKET-

Dubai and Abu Dhabi’s office markets are expected to heat up, driven by the surge in demand for premium properties, particularly from hedge funds and asset managers in Dubai and state-owned firms in Abu Dhabi, Markaz said. However, with a shortage in high-quality properties in the two emirates, developers are accelerating their existing and upcoming projects to meet the rise in demand.

More supply incoming? For the remainder of 2024, Dubai is set to add 46k units, while Abu Dhabi’s office space is expected to expand by 8.7k new units by year-end — though a large portion of these might not be realized as planned, Markaz cautioned.

ICYMI- Dubai’s office rental market remained tight in 2Q 2024, with rentals increasing despite a dip in average occupancy for grade A assets, according to CBRE. In Abu Dhabi, occupancy rates rose to 94.7%, with prime office rents up 9.1% y-o-y and Grade A rents up 7.4%. The limited new office supply led to a 38.4% spike in Dubai’s rental registrations and a 15.9% rise in Abu Dhabi’s, tipping the market in favor of landlords during 2Q 2024.

RESIDENTIAL-

Dubai’s residential market sales are poised to keep growing in 2024, albeit at a slower rate than 2023, fueled by strong demand for off-plan properties amid limited new supply.

Climbing rental rates are also expected to persist in the emirate as tenants opt to renew their existing leases to avoid the higher rates in Dubai’s prime areas.

In contrast, Abu Dhabi’s rental market is showing signs of cooling. With a 15.5% y-o-y drop in renewed contracts and new registrations falling 2.4% y-o-y in 1Q 2024, Markaz projects the rental moderation to continue throughout 2024 despite the market’s overall resilience.

ICYMI- Dubai’s residential market soared in 1H 2024, with prices jumping 21.3% y-o-y and rents rising 21.1% y-o-y, according to CBRE. Abu Dhabi saw more modest gains, with both apartment prices and rents increasing around 6% y-o-y. Property transactions in Dubai hit a new record in 2Q 2024, climbing to some 48k, according to Springfield.

RETAIL + HOSPITALITY-

Dubai’s retail property market continues to be buoyed by strong tourism activity, with a shortage in supply due in larger malls driving a shift from local Emirati brands towards smaller community malls.

ICYMI- CBRE had also said that Dubai and Abu Dhabi’s retail markets are experiencing a supply-demand imbalance, as more global brands set up shop in the emirates, making way for a more landlord-favored market.

The UAE’s hospitality sector is also steadily expanding, propelled by its “diverse calendar of global events and improved connectivity,” the report said. An additional 5k keys are slated to be added in Dubai in 2024, while Abu Dhabi is expected to roll out 500 keys.

Fast facts: Dubai saw 11 new hotels open in 1Q 2024, offering up nearly 2k new keys, and bringing the total number of hotels operating in the emirate to 832. The total number of hotel rooms offered in the emirate rose 1.2% y-o-y to 152.2k.

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