A new report from Asteco says that the Dubai real estate market has continued to significantly outperform many of its worldwide peers; and meanwhile, sales activity for completed and off-plan developments in Abu Dhabi reached highs not seen in almost a decade. Both emirates demonstrated great resilience in the face of rising interest rates and inflation, stated the Q2 2023 report.
For Abu Dhabi, the Asteco report indicated that approximately 1,400 apartments were added to the market during Q2 2023, with another 2,200 apartments and 850 villas expected for delivery by the end of the year.
Whilst new supply was distributed across most established International Investment Zones, the majority was delivered within the Al Reem Island and Saadiyat Island master plan communities in Abu Dhabi.
Several new projects are also in the planning or design stage, with official announcements expected later in 2023 and early 2024. The market also saw a number of new projects launched for sale in Q2 2023, including Murjan Saadiyat, The Source on Saadiyat Island and Jubail Island – Phase 3. In the rental market, rates for both apartments and villas within prime and high-quality residential developments increased between 2% and 5% over Q2 2023.
Prime villa communities, particularly those located on Saadiyat and Yas Islands, remain the most sought-after, with rental hikes of up to 10% over the same period last year. Mid and low-end developments remained relatively stable with nominal rental rate changes. Lower-end stock, on the other hand, has continued to face pressure from rising supply and an ever-expanding number of options.
Furthermore, there was high demand for office space, notably in the Grade A/B+ category, with interest expressed from both existing companies seeking to expand their footprint and new entrants to the Abu Dhabi market.
Strong transactional volumes for completed and off-plan developments were also recorded in Q2, with the end-user segment accounting for a significant amount of this demand.
Average villa sales prices within Abu Dhabi increased by nearly 2% throughout the quarter. However, sales prices for high-end and well-established villa communities continue to outperform, with some achieving sales price growth closer to 6%.
In addition, prime and high-quality off plan projects, located on Saadiyat and Yas Islands, have been well received with sales prices ranging between $408 and $1,034 per sqft.
On the Dubai market, Asteco said almost 11,000 residential units were delivered over Q2 2023, with apartments accounting for the majority of this stock (9,400 units).
Although villa supply slowed over the quarter, it is expected to pick up again in the second half of the year. The pace of supply is forecasted to further increase thereafter, with close to 20,000 completions planned for 2024/25.
Despite continued demand from existing tenants and newcomers, the market is not immune to changes in the real estate dynamics, including those at a micro level. Some areas, like Meydan (with the addition of Azizi Riviera), Arabian Ranches 3, and Al Furjan, saw minimal rental growth due to increased supply.
On the other hand, popular communities like Dubai Silicon Oasis (Cedre Villas), Al Waha/Layan Villas, Jumeirah Beach Residence (JBR), and The Greens/Views experienced above-average rent increases due to limited availability and tenant movement.
In the rental market, average apartment, villa, and office rental rates increased by 6%, 3% and 6% respectively over the quarter and 21%, 23% and 25% annually. Though the upward pressure continued unabated across all asset classes, the pace of increase has slowed within some communities and asset classes, particularly within the villa segment.
The post Abu Dhabi and Dubai real estate buoyant in Q2 appeared first on Middle East Construction News.
Source: ME Construction News
