Dubai real estate: Average property prices jump 20% in a year as Q3 sales pass $32bn; office, retail and industrial rents in focus

In Dubai, the residential market has again delivered a very solid performance during Q3 2024, with average prices registering close to a 20 per cent increase compared to the year prior.

This increase has been underpinned by a 19 per cent rise in average apartment prices and a 23 per cent increase in average villa prices.

Dubai real estate sales and rents

In the year to September 2024, rental growth has also continued almost unwavering with 19 per cent growth in average apartment rents and 13 per cent growth in average villa rents.

Rental contracts registered have continued to increase year-on-year versus the same period in 2023, primarily supported by a 14 per cent increase in the total number of registered renewal contracts, while new registrations declined marginally.

Dubai’s transaction volumes continue to rise, largely due to the sustained growth in the number of registered off-plan sales.

In the nine months to September 2024, the total number of residential transactions topped 125,000, up more than 36 per cent compared the same period in 2023.

Residential sales values have also continued to climb, totalling AED86bn ($23.4bn) for off-plan transactions and AED33bn ($9bn) for ready, respectively.

In total, Q3 saw around AED120bn ($32.4bn) in residential sales, which was up more than 30 per cent on the same three-month period last year. Given the current lack of available supply, performance in Dubai’s residential sector is set to remain positive in the coming quarters for both sales and rentals.

Looking at the Dubai office sector, strong activity levels continued against the backdrop of a very positive non-oil economy, which is driving new employment and resulting in robust year-on-year growth in the number of registered commercial Ejari leases.

However, with limited new office deliveries recorded year to date, and or expected over the remainder of the year, Dubai’s office sector will remain a heavily landlord-friendly market adding further upward pressure to occupancy rates and rentals in the coming quarters.

As of the end of the third quarter, the average occupancy rate of assets tracked by CBRE currently sits around 93 per cent, up from 92 per cent a year earlier.

In line with the sustained demand, office rentals rates remain on an upward trajectory, with average Prime, Grade A, Grade B, and Grade C rates seeing growth of 11 per cent, 21 per cent and 24 per cent, and 19 per cent respectively as compared to Q3 2023.

Looking at the hospitality sector, Dubai has continued to set new monthly visitor number records during 2024 and is on track to deliver the highest ever annual total, assuming momentum continues into the final quarter.

In the six months to June 2024, the number of international visitors in Dubai increased by 9.9 per cent, reaching a total of 8.12m. Average room rates (ADRs) have also remained broadly positive through YTD September, with Dubai seeing a 3 per cent increase in ADRs year-on-year.

The retail market continues to perform strongly leading into the end of the year and with limited available supply and high occupancy rates, leading rental rates to continue to rise.

Available retail supply remains particularly tight across Dubai, with most prime assets already running at close to full capacity, some even with extensive waiting lists of interested tenants.

Retail rents remained positive with average rates in Dubai rising by close to 3 per cent.

The short to medium term retail supply remains well below historical annual delivery norms, with delays to and redesign of several largescale mega malls and other super regional sized centres.

Accordingly, rental rates are likely to see further growth over the next year, albeit on much more limited completed transactions, with registered Ejari leases barely seeing growth on either a quarterly or annual basis, due to the restricted availability.

This dynamic was even more pronounced for new Ejari leases, with a -7 per cent decline year-on-year versus the same nine-month period in 2023, reflecting the tightness of the market. 

The industrial and logistics sector continues to see supportive macro environment and positive fundamentals for new demand, which is resulting in more aggressive actions from Landlords, with rising rentals being quoted across available projects in locations most notably in prime areas of North Dubai.

The persistent lack of quality available assets ready for lease is however constraining market activity and creating a challenging environment for corporate occupiers, particularly on new lease negotiations.

During the quarter, industrial Ejari registrations in Dubai were measured up by around 5 per cent year-on-year, with new leases rising by 4 per cent and renewals close to 6 per cent for the same period.

Matthew Green, Head of Research MENA in Dubai, said: “The UAE real estate market performance has remained robust through the third quarter with residential transactional activity continuing to reach new highs in Dubai, whilst the commercial office market in Dubai has seen sustained growth in rental and occupancy rates as demand for well-located high-quality accommodation outstrips available supply.

“The lack of short-term pipeline persists as a key challenge for multiple sectors, leading to an increase in the cost of living and doing business across the Emirates.

“However, while this may be a concern if prolonged, in the longer-term, for now, the non-oil economy remains buoyant and fundamentally supportive of further real estate growth over the next 12 months.”