The UAE’s residential market thrived in the first quarter of 2024 with prices, transaction volumes and rents keeping an upward trajectory as strong demand continued to drive performance.
CBRE Middle East said it expects Dubai’s residential sales market to maintain its buoyant growth in the coming months. “Prices in both the apartment and villa segments of the market will continue to grow, however, not at the same pace. On the rental front, we forecast that residential rents will continue to increase. That being said, the rate of growth will likely moderate,” the real estate services and investments company said in its report.
In Dubai, price growth continued to accelerate during the first quarter, with average prices increasing by 20.7 per cent in the year to March 2024. Average prices of apartments and villas increased by 20.4 per cent and 22.1 per cent, respectively.
March 2024 witnessed another record in Dubai’s residential market, with transaction volumes reaching the highest monthly figure on record, marking a year-on-year growth of 13.2 per cent. Throughout this period, off-plan sales and secondary market sales increased by 20.2 per cent, and secondary market sales increased by 2.2 per cent.
In the first quarter, Dubai’s total transaction volumes reached 35,310. This is the highest total ever recorded in the first quarter of the year, marking an increase of 20.5 per cent from the year prior. Over this period, off-plan transactions recorded an increase of 23.9 per cent, and secondary market transactions rose by 15.2 per cent.
In Abu Dhabi, during the first quarter of the year, the total volume of transactions stood at 2,795, registering a 22.6 per cent increase compared to the year prior. This increase has been underpinned by an 18.1 per cent rise in off-plan sales and a 34.5 per cent rise in secondary market sales. In the year to Q1 2024, Abu Dhabi’s average apartment and villa prices increased by 4.3 per cent and 2.3 per cent, respectively.
“The UAE’s residential market started the year on a relatively strong note, where the elevated demand levels continue to drive performance. The strong levels of activity and high absorption levels, which have reduced available supply, will continue to support price growth in both Abu Dhabi and Dubai over the remainder of the year,” said Taimur Khan, CBRE head of research Mena.
“In terms of rental growth, we expect that rental rates in Abu Dhabi will continue to rise, with prime areas set to outperform the market. In Dubai, residential rents will continue to increase; however, not at the same rate that we have been seeing to date, and we expect that the rate of change will diminish in the second half of the year,” said Khan.
In Dubai, average apartment prices stood at Dh1,486 per square foot, and average villa prices reached Dh 1,776 per square foot. Average villa sales rates are currently above their 2014 baseline by 22.9 per cent. Rental growth has also gained momentum in 2024, after a period of moderation in 2023.
In March 2024, average residential rents registered a year-on-year increase of 21.2 per cent, up from the 20.4 per cent growth registered a month earlier. Over this period, average apartment and villa rental rates grew by 22.1 per cent and 14.5 per cent, respectively.
Data from the Dubai Land Department revealed that, in the year to date to March 2024, the total number of rental registrations stood at 159,941, marking an increase of 5.8 per cent from the previous year. As for supply, a total of 6,526 units were delivered in the first quarter of the year, with 59.7 per cent of this supply being located in Meydan One, Jumeirah Village Circle, and Al Furjan. A further 46,086 are expected to be handed over the remainder of the year. However, given historic materialisation rates, we expect that a limited portion of this upcoming stock will come online as planned.
Abu Dhabi’s rental market witnessed a total of 46,130 residential rental contracts in Q1 2024, registering a decline of 10.9 per cent from the year prior. This has been due to a 15.5 per cent decline in the number of renewed rental contracts registered and a 2.4 per cent drop in new rental registrations over the same period. In the year to Q1 2024, average apartment and villa rents have increased by 4.5 per cent and 1.1 per cent, respectively.