Activity and performance are expected to continue to strengthen across all sectors in the UAE property market this year although residential could face “some headwinds”, according to consultants CBRE.
In 2022, 68,138 additional units are scheduled to be delivered, although the actual number is likely to be lower, CBRE said in a report.
It said transaction volumes are set to remain robust over the course of the year but with payment plans offerings tightening and mortgage rates likely to edge up, the market is likely to face some headwinds in 2022, at least compared to 2021.
In terms of transaction volumes, the total number of residential transactions in Dubai reached 57,043 in 2021, up 73.6 percent from 2020 and 51.6 percent from 2019. The 2021 total was also the highest since 2009, the report noted.
According to CBRE, average prices in Abu Dhabi increased by 1.6 percent in 2021 while rents in the residential market fell by 1.4 percent. A total of 5,435 new units were delivered.
Average prices in Dubai increased by 9.3 percent, the highest growth rate since January 2015 while average rents increased by 8.3 percent. In 2021, a total of 37,403 new units were delivered.
Looking at the UAE’s office sector figures, vacancy in office prime stock continues to be limited in Abu Dhabi and as a result, average prime rental rates edged up by 1.5 percent.
In Dubai, average market rents for offices continued to soften although the final quarter of 2021 saw a number of new market entrants acquire space and some existing occupiers also increased their quantum of space occupied, CBRE noted.
“In 2022, we thus forecast that market performance in the Prime and Grade A segments will continue to improve,” it added.
In the hospitality sector, the average occupancy rate increased by 14.5 percent year-on-year and the average daily rate (ADR) increased by 26.9 percent. As a result, average revenue per available room (RevPAR) rose by 62.5 percent.
The UAE’s occupancy in 2021 sits 7.1 percent below its 2019 level but the ADR is 4.3 percent higher while RevPAR is down by 5.8 percent.
Taimur Khan, head of research – MENA at CBRE in Dubai, said: “Underpinned by Expo 2020, the UAE’s less restrictive travel restrictions and the more palatable temperatures, the recovery only began in earnest in the last quarter of 2021.
“Looking forward, I believe that performance in the UAE’s hospitality market is likely to remain fairly steadfast for the first third of the year. After this, with restrictions in Europe likely to ease, occupancy rates and ADRs should see a material softening.”
Elsewhere, retail activity in Abu Dhabi and Dubai currently stands at 4.6 percent and 9.7 percent above their respective pre-pandemic baselines, CBRE said.
It added that major new developments are scheduled to be delivered and begin operations in both Abu Dhabi and Dubai. “We expect that there will be continued pressure on average rents. We also expect market performance to be fragmented, with prime assets likely to outperform the wider market,” the report said.
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