Dubai – The UAE’s residential market continues to showcase strong levels of demand, which is helping maintain strong performance in Q3 2023.

In Abu Dhabi, the total volume of residential transactions reached 2,930 in Q3 2023, up by 84.3% from the year prior. This increase has been underpinned by a 101.6% growth in off-plan market sales and a 46.0% increase in secondary market sales. In the year to date to Q3 2023, a total of 7,844 transactions were registered, marking a year-on-year growth of 91.1%. Over this period, off-plan transactions grew by 135.5%, and secondary market transactions rose by 22.7%. In the year to the third quarter of 2023, average apartment prices in Abu Dhabi increased by 0.9%, whilst average villa prices marginally dropped by 0.1%.

Average apartment and villa rents in Abu Dhabi each increased by 1.1% in the year to the third quarter of 2023. Considering recent rental registrations, average apartment and villa annual rents reached AED 66,823 and AED 161,683, respectively. On the supply front, a total of 2,262 units have been delivered in Abu Dhabi in the year-to-date to Q3 2023, with 63.4% of this stock being delivered in Najmat Abu Dhabi and Shams Abu Dhabi. By year-end, an additional 3,521 units are expected to be completed, with 63.1% of this new stock is expected to be delivered in Al Maryah Island. That being said, given past trends, we do expect some of the completions will be pushed into 2024.

In Dubai, average residential prices rose by 19.6% in the year to September 2023, where over this period, average apartment and villa prices increased by 19.7% and 18.9%, respectively. Although demand remains relatively elevated, we continue to see further moderation in the rental market. The rate of rental growth has softened throughout the year, where in the year to September 2023, average residential rents in Dubai increased by 20.6%, down from the 21.7% growth registered a month earlier. In terms of supply, in the year to date, 27,095 residential units are estimated to have been delivered, with 46.4% of this supply being located in Meydan One, Downtown Dubai and Business Bay. A further 34,651 units are expected to be handed over the remainder of the year. Despite that, we do expect that a limited portion of this stock will be completed by year-end.

In September 2023, activity levels softened amidst a contraction in the off-plan market, where a total of 7,523 transactions were registered in Dubai’s residential market, down by 8.3% from the year prior. This softening has been driven by a 41.5% drop in off-plan sales, whilst secondary market sales increased by 30.5%. That being said, despite this monthly slowdown, in the year to date to September 2023, the total volume of transactions reached 87,163. This is the highest figure ever recorded over this period, with off-plan transactions increasing by 55.3% and secondary market transactions increasing by 19.0%. Given the current market fundamentals, we expect that the 2023 total transaction volumes will likely surpass the 2022 total. Within the prime segment of the market, the number of transactions above AED 5 million totalled 445, down by 5.5% from the previous year and the number of transactions within the super-prime market segment (AED 10 million and above) dropped by 5.8% to reach a total of 229.

Looking ahead, the moderation trend witnessed in the rental market will likely be maintained, particularly as rental growth in a number of key residential communities is tapering off, and a significant portion of listings within these neighbourhoods are increasingly reducing their asking rents. In the sales market, we expect that prices will continue to rise in both the apartment and villa market segments, That being said, we will not see that happen at the same pace as seen in the earlier parts of 2023.

Taimur Khan, Head of Research – MENA at CBRE in Dubai, comments: “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. 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.”

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CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2022 revenue). The company has approximately 115,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com