Asteco’s Q2 2024 Report Reveals Sustained Growth In the UAE Real Estate Market

According to the Asteco Q2 2024 real estate report, Dubai’s strong economy and attractive lifestyle remain major draws for expatriates. Dubai’s underlying fundamentals are robust, driven by high equity in the real estate market, continued economic growth, infrastructure development and a growing population. The report also highlights that Abu Dhabi’s real estate market is set for continued growth in 2024, supported by government initiatives and robust economic fundamentals. Meanwhile, the Northern Emirates are poised for sustained development, underpinned by strategic planning, attractive affordability, and increased investments.

Abu Dhabi Residential and Office Market

According to the report, the Abu Dhabi market saw the delivery of around 2,400 residential units, particularly in Noya on Yas Island, Jubail Island, Masdar City, and Al Raha Beach. Several residential and mixed-use projects are currently in the planning stages, with public launches expected throughout 2024, further broadening Abu Dhabi’s real estate landscape.

In the rental sector, the market continued to record strong activity, particularly in upscale apartment and villa locations. Average apartment rents saw modest quarterly and annual increases of 1% and 2%, respectively. Villa rents maintained a steady performance, reflecting a 5% increase over the past 12 months. Landlords in Abu Dhabi’s prime residential areas, particularly in waterfront communities such as Al Raha Beach, Saadiyat, Yas, and Al Reem Islands, benefited from strong occupancy rates and high demand, with some properties even having waiting lists. Comparable mid-end properties in prime investment areas experienced annual growth of over 5%. Properties at the lower end of the market exhibited stability, primarily due to landlords offering attractive lease terms to entice tenants.

 The market also saw a steady influx of private and corporate investments, fuelling demand for high-quality office spaces, and leading to significant rental growth. Grade A offices in prime locations experienced a substantial (circa 10%) increase compared to the previous year, with robust quarterly growth ranging between 3% and 8%, especially for new contracts.

In Q2 2024, Abu Dhabi recorded 2,135 sales transactions, with off-plan sales accounting for 57%. Apartments dominated off-plan and ready sales, comprising 85% and 75% of their respective segments, and experienced a 6.8% quarterly increase. Ready property transactions showed healthy growth at 2.8% quarterly and 33.1% annually. However, off-plan sales declined by 23.4% annually due to fewer project launches compared to the previous year. Apartment sales prices continued their upward trend with average quarterly and annual growth rates of 4% and 5%, respectively.

Dubai Residential and Office Market

The report indicates that in Q2 2024, the pace of new supply delivery decelerated compared to Q1 2024, with approximately 6,750 residential units completed. Project launches, however, continued at a robust pace, encompassing a wide array of developments from single low-rise buildings and skyscrapers to expansive master-planned communities. Looking ahead, Asteco anticipates the delivery of an additional 25,000 residential units in the second half of 2024, though some may be delayed until 2025.

While apartment and villa rental rates recorded quarterly increases of 3% and 2%, respectively, annual rental growth moderated to single digits, with apartments seeing an 8% increase and villas 4%. This uptick is primarily attributed to the revised RERA rental index, which permits landlords to implement larger rent increases upon lease renewal.

The office rental market continued to thrive, particularly for Grade A space, driven by robust demand and limited supply. The upward pressure on rents is expected to persist until new supply enters the market or business conditions change.

The sales market in Dubai remained strong, driven by ongoing project launches that boost off-plan transactions. While Q2 2024 recorded a steady 2% growth in average sales prices, several areas, including Jumeirah Village and Business Bay, experienced above-average sales price growth. This is attributed to a general increase in demand and in part to a significant rise in both off-plan launches and newly completed developments. These new projects often feature superior quality compared to earlier ones in these areas and are priced accordingly. The off-plan property market continued to maintain remarkable momentum, with both local and international investors eagerly acquiring newly launched units, attracted by the promise of strong returns on investment in a tax-friendly environment.

Additionally, some lenders started offering enhanced financing options for off-plan properties, allowing buyers to secure up to 10% more funding during construction. This additional funding is typically available for projects with at least 50% construction progress, ensuring a degree of risk mitigation for the lender. This move not only stimulates the off-plan market but also broadens accessibility to potential buyers.

Al Ain and Northern Emirates Market

During Q2 2024, the Northern Emirates noted an increase in tenant migration from Dubai due to several factors, such as lower rental rates, improving standards of development, enhanced infrastructure, and the adoption of more flexible and hybrid working arrangements.

Asteco observed greater rental growth for ‘typical’ apartments compared to high-end properties across the Northern Emirates. The sales market maintained a high level of activity over Q2 2024, with a steady flow of project launches.

Al Ain’s residential rental market maintained its positive momentum throughout the most recent quarter. Apartment rental rates remained stable both quarterly and annually, especially for well-maintained properties. Similarly, villa prices held steady compared to the previous quarter, with a 2% year-on-year increase.