Abu Dhabi’s development pipeline shows no signs of slowing down in 2023, says Asteco
More than 32,000 residential properties in Dubai, including villas and apartments, will be handed over by the end of 2023, real estate consultancy Asteco said in its Q1 2023 report, indicating the growth of the emirate’s real estate sector and its post-pandemic resiliency.
Despite growing concerns over the volume of future housing supply, the emirate will see the completion of 27,400 apartments and 4,650 villas by year-end. The emirate reported delivery of 27,000 apartments and 3,930 villas in 2022, the report said.
Nevertheless, the appetite for new project launches continues to be well received by investors and end-users, the report added.
Dubai recorded delivery of nearly 7,600 units in Q1 2023, matching the volume in the final quarter of 2022. The villa supply picked up significantly, with approximately 2,150 units handed over, more than doubling from the previous quarter.
Villas remained the predominant focus, offering higher rental and occupancy rates. The average apartment and villa rental rates continued to record strong growth in Q1 2023, particularly in higher-quality developments, with quarterly increases of 4% and 7%, respectively.
The annual price increase for apartments and villas grew 17% year-on-year, with apartments and villas up 3% and 5%, respectively.
Office rental rates grew on average by 6% over the last three months, with annual rental increases at 21%.
Asteco expects the momentum to continue throughout 2023 in the Dubai real estate market, albeit at a more sustainable rate than in 2022.
The UAE capital saw a supply of around 1,600 residential units in Q1 2023, mainly across Al Raha Beach, Al Reem Island and Saadiyat Island.
“With several new projects currently in the planning and design stage and anticipated to launch over the year, Abu Dhabi’s development pipeline throughout the rest of 2023 shows no signs of slowing down,” Asteco said.
While apartment rental rates showed stability, prime and high-quality apartment developments registered an average rental increase of 2% in Q1 2023. But, these increases were limited to new tenants.
The villa rental market continued its upward trajectory in Q1 2023, with an average quarterly increase of 2%. Lease rates in prime villa communities rose up to 5%.
Sales prices for completed residential apartment and villa developments were broadly flat over Q1, albeit the average increase over the past 12 months was 2.0%.
While sales rates for the off-plan prime and high-quality projects segment surged recently, they remain at a steep discount to comparable properties in Dubai but represent “exceptionally good value”.
Demand for office space in Abu Dhabi, particularly for Grade A / B+, remained strong, predominantly in prime locations, the report stated.