Dubai and Abu Dhabi witness significant upsurge in residential real estate demand in Q3 2023.
The residential real estate market in the UAE has continued to exhibit robust demand, leading to strong performance in the third quarter of 2023, according to a new report by CBRE.
In Abu Dhabi, there has been a remarkable increase in the total volume of residential transactions, with 2,930 transactions registered in Q3 2023, marking an 84.3 percent surge compared to the previous year.
This increase in demand can be attributed to a substantial growth in off-plan market sales, which saw a remarkable increase of 101.6 percent.
“Strong performance continues to be seen in the UAE’s residential market in the third quarter of the year. The elevated levels of activity, paired with the lack of upcoming stock in both Abu Dhabi and Dubai, will likely continue to drive price growth moving forward,” Taimur Khan, Head of Research – MENA at CBRE in Dubai said.
Secondary market sales also experienced a notable boost of 46.0 percent during the same period. In the year-to-date figures for Q3 2023, a total of 7,844 transactions were recorded, representing a significant year-on-year growth of 91.1 percent.
Within this timeframe, off-plan transactions saw a substantial increase of 135.5 percent, while secondary market transactions rose by 22.7 percent.
In Abu Dhabi, average apartment prices witnessed a modest increase of 0.9 percent, whereas average villa prices showed a marginal decrease of 0.1 percent.
Meanwhile, average apartment and villa rents in the city each increased by 1.1 percent, with annual rents reaching AED66,823 for apartments and AED161,683 for villas.
“On the rental front, despite demand in Abu Dhabi softening year-on-year, the number of tenancy contracts registered in Dubai increased significantly, although the growth rate of average rents within the city has been moderating since the beginning of the year. In Abu Dhabi, we expect that rents will continue to rise over the forthcoming period, however, the growth rate will remain in the low single digits. In Dubai, rents will continue to increase, however, not at the same pace,” Khan said.
In terms of supply, it is estimated that 27,095 residential units were delivered in Dubai during the year-to-date, with 46.4 percent of this supply concentrated in Meydan One, Downtown Dubai, and Business Bay.
An additional 34,651 units are anticipated to be handed over by the end of the year. However, it is expected that a limited portion of this stock will be completed by year-end.
In September 2023, there was a slowdown in activity in the off-plan market in Dubai, with a total of 7,523 transactions recorded, representing an 8.3 percent decrease from the previous year.
This decline was driven by a 41.5 percent drop in off-plan sales, while secondary market sales increased by 30.5 percent.
Nevertheless, in the year-to-date figures leading up to September 2023, the total volume of transactions reached 87,163, the highest figure ever recorded over this period.
Off-plan transactions increased by 55.3 percent, and secondary market transactions increased by 19.0 percent.
In the prime segment of the market, the number of transactions above AED5 million totalled 445, down by 5.5 percent from the previous year, while the number of transactions within the super-prime market segment (AED10 million and above) dropped by 5.8 percent to reach a total of 229.
Looking ahead, it is expected that the moderation trend observed in the rental market will continue, particularly as rental growth in key residential communities tapers off, and a significant portion of listings in these neighborhoods reduce their asking rents.
In the sales market, prices are anticipated to continue rising in both the apartment and villa segments, although at a slower pace than earlier in 2023.
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