Dubai’s Central Business District’s office rents saw a 24% year-on-year increase in Q3.
The UAE continued to witness a positive trajectory across the residential, office, retail and hospitality sectors in the third quarter of this year, JLL highlighted in its latest UAE Real Estate Market Report.
Overall, average residential prices in Q3 grew by 9 per cent year-on-year in Dubai, while average rental rates saw a 25 per cent year-on-year increase, with both sales and rentals being bolstered by stronger demand and increased buyer activity. Meanwhile, sale prices in the capital grew by 4 per cent year-on-year, while average rents rose by 2 per cent year-on-year. Abu Dhabi is seeing increased demand for new developments located within investment zones – especially for townhouses and villas.
Across the UAE, price growth is being fueled by investor and end-user demand. Off-plan sales are high, while secondary market sales are also improving, in light of increasing yields. The quarterly report suggests around 6,600 residential units were handed over in Dubai in Q3, raising total stock to 672,000 units, while an additional 20,000 units are scheduled for completion by year end.
In Abu Dhabi, approximately 1,900 units were delivered in Q3, bringing the Emirate’s total dwellings to roughly 278,000 units. The research suggests the capital plans another 2,000 units – mostly within master-planned communities – to be completed by year end.
“End-users using mortgage finance to purchase properties have been rushing to lock-in fixed rates in an environment where both interest rates and rents are rising quickly. Indeed, REIDIN’s citywide residential rent index showed annual growth of 25 per cent in August,” said Khawar Khan, Head of Research, Middle East, Africa and Turkey at JLL. “Price growth is also being fueled by investor demand. This category has been returning to the off-plan market in force, while sales in the secondary market have also picked up in view of the upward trajectory of yields.”
Dubai’s Central Business District (CBD) office rents saw a 24 per cent year-on-year increase in Q3, caused by continued scarcity of good quality stock and no new office completions across the city. The emirate anticipates the addition of approximately 53,000 square meters of office space ready for handover by year end. The city’s most central office space is currently close to capacity, with office vacancy rates standing at just 13 per cent, approximately 8 per cent-points lower than a year ago.
This quarter saw Dubai’s Grade A CBD rents reach an average of Dhs2,084 per sqm per annum, while Abu Dhabi saw a 9 per cent year-on-year rise to Dhs1,750 per sqm per annum. While Abu Dhabi added 63,000 sqm of new office space to its stock since Q2, the bulk of enquiries in Q3 were regarding co-working and serviced offices, underlining that new post-pandemic hybrid working models are here to stay.
There is no new office stock planned for Abu Dhabi’s Q4 pipeline.
The vacancy rate for Grade A and B office space in the capital fell by 3 per cent over the last quarter.
While the third quarter saw no new retail projects completed in either Dubai or Abu Dhabi, the sector’s Q4 activity looks set to welcome around 154,000 sq. m. of new retail space in Dubai and 197,000 sqm in the capital.