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JLL, a leading real estate expert, said the UAE’s real estate sector continued to gain momentum driven by positive developments in the residential, office, retail and hospitality sectors in the third quarter of this year.
Overall, average residential prices in Dubai rose 9% year-on-year in the third quarter, while average rents rose 25% year-on-year, with both sales and rentals driven by strong demand and increased buyer activity. JLL in its latest UAE real estate market report.
Meanwhile, selling prices in the capital rose 4% year-on-year, while average rents rose 2% year-on-year.
It added that Abu Dhabi has seen increasing demand for new developments located within the investment zone, especially townhouses and villas.
Across the UAE, price growth was driven by investor and end-user demand. In its report, JLL said off-plan sales were high given the increase in production, while secondary market sales were improving.
The quarterly report showed Dubai delivered some 6,600 residential units in the third quarter, bringing the total inventory to 672,000, while another 20,000 are scheduled to be completed by the end of the year.
In Abu Dhabi, approximately 1,900 dwellings were delivered in the third quarter, bringing the total number of dwellings in the emirate to approximately 278,000. Research shows the capital plans to complete another 2,000 units by the end of the year – mostly within master-planned communities.
Khawar Khan, head of research at JLL Middle East, Africa and Turkey, said: “In an environment where interest rates and rents are both rapidly rising, end-users using mortgages to purchase properties have been scrambling to lock in fixed rates. . In fact, Reidin’s citywide The residential rent index showed an annual increase of 25% in August.
“Investor demand has also driven price growth. The category has returned to an efficient off-plan market, while secondary market sales have picked up given the upward trajectory of yields,” Khan noted.
On the office front, JLL said rents in Dubai’s central business district (CBD) rose 24% year-on-year in the third quarter, as prime inventory continued to be scarce and no new office completions were completed across the city.
The emirate is expected to add 53,000 square meters of office space, ready to hand over by the end of the year. The city’s most central office space is now close to full capacity, with a vacancy rate of just 13%, about 8% lower than a year ago.
A-grade CBD rents in Dubai averaged AED2,084 per sqm per annum during the quarter, while rents in Abu Dhabi increased by 9% year-on-year to AED1,750 per sqm per annum.
While Abu Dhabi has added 63,000 sqm of new office space since the second quarter, most of the enquiries in the third quarter were about co-working and serviced offices, underscoring that the new post-pandemic hybrid office model will continue exist. It said no new office stock was planned for Abu Dhabi’s fourth-quarter pipeline.
It added that the vacancy rate of Grade A and Grade B offices in the capital fell by 3% from the previous quarter.
On the retail front, JLL said that while no new retail projects were completed in either Dubai or Abu Dhabi in the third quarter, the sector’s fourth-quarter activity appears to be set to usher in some 154,000 square meters of new retail space in Dubai and the capital. 197,000 sqm of new retail space.
With retailers having ample supply to choose from, potential tenants are more strategic in choosing the location of new stores.
The industry expert said the modest growth in retail rents (3 per cent in Dubai and 5 per cent in Abu Dhabi) reflects the sector benefiting from improved levels of consumer confidence.
While easing restrictions are helping foot traffic recover, mall owners are recognizing the importance of differentiating their products in a well-supplied environment. It added that malls are introducing more experiential retail concepts and are looking to offer visitors a wider variety of stores, given more competition.
JLL expects more developers and landlords to look to introduce home-grown concepts – especially in the F&B sector – because of their appeal to offer experiences that fit local needs, while also being relatively adaptable.-TradeArabia News Service
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