"For those planning on residing in Dubai for five years or more, the financial benefits of purchasing over renting become apparent when considering the overall return on investment"

Dubai residential market has witnessed a well-documented surge in prices in recent years. Image: Shutterstock

For prospective buyers, the decision between buying vs renting is circumstantial. It boils down to individual circumstances, including factors such as perceived security, long-term residency plans, job stability, and the desire to establish roots in Dubai.

For those planning on residing in Dubai for five years or more, the financial benefits of purchasing over renting become apparent when considering the overall return on investment. Even in scenarios where the market experiences a cooling period, individuals who opt for mortgage payments over rent for a similar duration typically find themselves in a better position.

Owning a property offers the potential to either rent it out or sell it for a profit. If your tenure in Dubai is relatively short-term, opting to rent may be the more practical choice. Purchasing property entails entry costs and exit expenses. Therefore, if you plan to stay for one to three years in Dubai, renting is likely the better option.

Dubai’s affordability appeal in real estate

In recent years, the Dubai residential market has witnessed a well-documented surge in prices, compared to levels seen three or four years ago. However, it’s crucial to consider the emirate’s position on a global scale. Despite recent increases, Dubai remains relatively undervalued when compared to other major capital cities worldwide, including Paris, Singapore, London, and select regions of the US. This favorable affordability factor continues to attract individuals toward Dubai as a preferred destination.

Looking at the number of buyers we are registering at Espace Real Estate along with the volume of transactions occurring, everything points towards a further price increase, albeit maybe not to the same extent as what we’ve seen over the previous couple of years, but points to be towards a 5 to 10 percent price increase throughout the course of 2024. If you intend to purchase and stay in Dubai for an elongated period of time throughout the course of your Dubai experience, I advise buying vs renting because, in my view, current prices are likely lower than they will be in the next 12 months.

Many clients often ask about the possibility of the market declining and what would happen in the worst-case scenario. I always advise them to consider the absolute worst-case scenario. For instance, if they were to lose their job suddenly and had to leave Dubai urgently, they need to evaluate their ability to repay the mortgage and the potential rental income if they were to rent out the property.

 

It’s crucial to buy within one’s means, considering that markets can fluctuate. However, it’s important to remember that what goes down must eventually come up, and vice versa. Therefore, I always stress the importance of purchasing a property that aligns with their financial capabilities.

For instance, if their mortgage repayment is AED15,000 per month, totaling AED180,000 annually, they should assess whether this amount is covered by potential rental income, even during the lowest market conditions. While this scenario may seem extreme, it ensures that the property won’t become a financial burden in the event of unforeseen circumstances.

Even though we may not experience market downturns similar to those in 2020, having this safety net provides peace of mind. In the worst-case scenario, if they own the property, they can rent it out and eventually sell it for a profit down the line – a strategy that has been historically successful in Dubai’s real estate market.

 

 

Property portal’s research finds that two-bedroom apartments are the most sought-after rental option

Real estate sales transactions in Dubai recorded a more than 27 per cent surge in February, or an increase to 11,900 deals from 9,371 posted in February 2023, underscoring the sustained market buoyancy this year.

“Further leveraging the positive trends from 2023, the value of transactions experienced a remarkable upswing, reaching almost Dh36.6 billion and marking an increase of 35 per cent compared to the same month in 2023, highlighting the strength and dynamism of the real estate market,” Property Finder, a leading property portal in the Mena region, said.

The portal’s research found that two-bedroom apartments emerged as the most sought-after rental option, comprising 35 per cent of total searches, closely followed by one-bedroom apartments, which accounted for 33 per cent.

In January 2024 too, with record-breaking sales totalling Dh35.4 billion, Dubai’s real estate market witnessed a remarkable boom signifying a positive outlook for the sector in 2024 on the back of a sustained momentum from the previous year and a growing demand for off-plan properties. January broke records with a substantial increase of 27 per cent compared to Dh27.9 billion in January 2023, showcasing a consistent upward trend in recent years.

In February, existing property transactions recorded a year-on-year increase of approximately 23 per cent in volume, with over 5,500 transactions. The value of these transactions surged by 46 per cent year-on-year, touching Dh23.5 billion, compared to Dh16 billion in February 2023, Property Finder said in its report.

Off-plan showed more demand, while the existing property transactions had a year-on-year increase of 31 per cent in volume and 6,385 recorded transactions. While the value of these transactions experienced a surge of around 18.5 per cent year-on-year, reaching around Dh13 billion, compared to Dh11 billion in February 2023.

Cherif Sleiman, chief revenue officer at Property Finder, said February maintained the momentum established in January, indicating optimistic prospects for ongoing success throughout 2024.

Sleiman said there was a remarkable surge in the real estate market in February with significant increases in both transaction volume and value. “This reaffirms the resilience and dynamism of the industry, reflecting positive trends and promising opportunities for investors and home seekers alike. It is interesting to see while existing property transactions surged in both volume and value, off-plan transactions exhibited even higher demand with a greater year-on-year increase in volume.”

The research found that some 59 per cent of home seekers who had an interest in buying property were searching for an apartment, while 41 per cent are seeking villas/townhouses. Conversely, in the rental market, approximately 80 per cent of tenants are searching for apartments, while the remaining 20 per cent are seeking to own a villa/townhouse.

Roughly 60.7 per cent of tenants seeking apartments prefer furnished properties, while 36.6 per cent are searching for unfurnished options. In contrast, tenants who are able to afford villa/townhouse rentals have different preferences, with about 55.5 per cent seeking unfurnished units and 42.6 per cent looking for furnished options.

According to the portal, approximately 36 per cent of tenants were seeking one-bedroom units, while 31 per cent expressed a preference for two-bedroom apartments and 22 per cent were searching for studios. “Regarding villas/townhouses, 42 per cent of tenants were primarily looking for three-bedroom units, while 35 per cent were searching for four-bedroom or larger options. As for ownership, approximately 33 per cent of home seekers or investors were seeking one-bedroom units, while 35 per cent expressed a preference for two-bedroom apartments and 15 per cent were searching for studios. Regarding villas/townhouses, 40 per cent of home seekers were primarily looking for three-bedroom units, while 44 per cent were searching for four-bedroom or larger options,” it said.

Top areas searched to own apartments included Dubai Marina, Downtown Dubai, Jumeirah Village Circle, Business Bay, and Palm Jumeirah. Dubai Hills Estate, Al Furjan, Arabian Ranches, Palm Jumeirah and Mohammed bin Rashid City were the most desired areas to own villas/townhouses. Leading areas for rentals were Dubai Marina, Jumeirah Village Circle, Downtown Dubai, Business Bay and Deira. Dubai Hills Estate, Damac Hills 2, Jumeirah , Al Barsha and Umm Suqeim were popular when it came to searches to rent villas/townhouses.

With 16% price growth, Dubai stands 2nd second, while Bahamas is third on list with a 15% price growth.

Manila, the capital of the Philippines, has left everyone surprised by being titled the city with the most luxury property growth, dethroning the United Arab Emirates' blingy metropolitan, Dubai.

According to Knight Frank's latest Wealth Report, as reported by the New York Post, Mansion Global has revealed that last year Manila was the world's fastest-growing high-end real estate market.

With a 26.3% increase in yearly prices in luxury real estate, the capital of the Philippines — widely regarded as the densest city on Earth — surpassed the opulent Middle Eastern city, which stood first in Knight Frank's previous reports.

With a 16% price growth, Dubai came in second, securing the silver position, and the Bahamas came in third with a 15% price growth, clinching the bronze position.

The far-southern and popular tourist destination in Portugal, the Algarve, saw 12.3% growth, ranking it fourth, with Cape Town coming in fifth, respectively.

Meanwhile, the cost of luxury real estate dropped in London and New York.

The report generally carried positive reviews for the luxury residential market, which managed to come out on top even while facing significant headwinds from a global increase in the cost of living and heightened interest rates, Mansion Global noted.

According to Knight Frank's data, the commercial sector also had a less fortunate year, with worldwide real estate investment falling 46% to $698 billion in 2016. The investigation concluded that the work-from-home trend that was sparked by the pandemic was mostly to blame.

Opinions expressed by Digital Journal contributors are their own.

Dubai is known for its wealth of opportunities for people who are willing to invest. The Middle East, Africa, and South Asia are home to over three billion people who are connected with each other in terms of mobile connectivity and an increasing level of trade and investment.

Market dynamics in real estate use interplaying factors that mainly influence supply, demand, pricing, and investment trends.

Economic conditions such as GDP growth, employment rates, interest rates, demographic shifts, including population in that particular area, migration shifts, and changing household compositions have a greater impact on various types of properties in Dubai.

Many property portals are offering services regarding investment and opportunities in the real estate market in Dubai, but property portal Bayut is playing a significant role in offering state-of-the-art properties and captivating market dynamics, as well as providing compelling reasons to invest in the UAE. Government policies and regulations can affect market dynamics by influencing development patterns and investment decisions.

Dubai’s investment appeal: 10 key reasons to explore opportunities in real estate

The real estate market in Dubai has seen a construction boom that has attracted overseas investors to Dubai’s real estate market. The city is an ideal place for investment, offering world-class infrastructure and impressive skylines. Dubai is offering a bundle of opportunities in the real estate sector, whether to invest in long-term investment plans in the residential, commercial, off-plan, industrial, and hospitality sectors. As the real estate market in Dubai is growing day by day, it is offering unprecedented opportunities for substantial returns.

Some of the key reasons to explore opportunities in Dubai’s real estate are described below:

1. Tax-free on property investment In Dubai

According to the Bayut report, Dubai is offering tax-free property investment, which means all the money you make in the UAE is 100% yours. Say goodbye to property taxes and welcome endless opportunities for investors in the real estate market. When investors seize the property, they will be thrilled to know that Dubai has waved farewell to additional charges imposed on properties, whether residential or commercial.

Moreover, the USA is not exempt from tax on properties; every state in the USA pays less or more of the average tax on properties, which is 1% (according to the Belong home report).

2. Unlocking investment potential in Dubai with affordable prices

Dubai is the city that whispers in investor’s ears the secrets of luxury properties. In Dubai, properties are sparkling per square foot with affordability. Without breaking the bank, Dubai offers golden opportunities to own premium properties.

These affordable prices in Dubai encourage investors to own their slice of affordable luxury.

While discussing New York City, the average prices per square meter for luxury apartments for sale are:

3. High rental yields

Dubai is known as the ultimate haven for investors because of its higher rental yields and the supreme adventure of real estate properties. The real estate market in Dubai boasts excellent returns. As per the Bayut report on ROI in Dubai for different areas, it is:

While in the USA, rental yields vary from state to state. The average return on investment (ROI) for three states in the USA — New York, Chicago, and Miami — is:

4. Opportunity for investment visa 

Dubai offers an investment visa, also known as a golden visa, which is offered to qualified investors. A golden visa is a long-term residence visa that enables foreign investors to live, work, and study in the UAE with exclusive benefits such as a complete procedure with residence issuance and a free entry visa for six months with multiple entries.

There is an offer of a Golden Visa for investors in real estate.

5. Commitment to safety

The UAE is the most secure country due to many reasons for investors and the people living in the UAE. These reasons include:

• Abu Dhabi, Ajman and Dubai rank among the world’s 5 safest cities. (according to the Zawya report.)
• Dubai is committed to giving safety and security to foreign investors in all fields, especially real estate
• Investors can invest in real estate properties in Dubai without stress because of the strict rules and regulations of the Dubai authorities. Real estate laws in Dubai and regulations governed by the Dubai Land Department (DLD) ensure the safety and security of all citizens, residents, buyers, and sellers in the vibrant real estate market. The real estate regulatory agency (RERA) has a dispute resolution committee to hear customer complaints and provide a final decision. To ensure transparency and fairness in real estate transactions, the DLD strictly implements rules and regulations for investors.
• The proactive approach towards law enforcement is the key factor for Dubai’s security.

6. Embracing freedom: The allure of freehold ownership In Dubai

Dubai is a place that offers complete ownership of properties to foreign investors. Freehold ownership means investors have complete ownership of the property to buy, sell, lease, or live in it. Investors are offered unparalleled flexibility and control over their own assets.

A list of freehold areas that offer complete ownership of properties is (according to Bayut):

• JBR
• The springs
• Downtown Dubai
• Dubai Land
• The meadows
• Business Bay
• Dubai Marina
• Jumeirah Village Circle
• City Walk
• La Mer
• Dubai Silicon Oasis
• Jumeirah Village Tower 

Other than this, plenty of freehold properties are available in Dubai for foreign investors. The top freehold areas that offer the highest ROI are Dubai Silicon Oasis, with an ROI of 9.07%, Jumeirah Village Tower, with an ROI of 8.57%, and Jumeirah Village Circle, with an ROI of 8.48%. (According to the Bayut report).

7. World’s most popular tourism destination

Dubai is well known as one of the top popular destinations for its magnificent architecture. Embrace the fusion of tourism and investment in Dubai’s vibrant real estate market and discover the rewards that await in Dubai’s dazzling landscape.

The real estate sector in Dubai is offering lucrative returns on investment with impressive growth.

Millions of tourists visit Dubai for:

• Iconic skylines
• Beaches 
• World-class attractions
• World-class infrastructure

From Burj Khalifa, the world’s tallest building, to the luxurious Palm Jumeirah, Dubai offers a blend of modernity and luxury.

8. Variety of investment options

Where opportunities are awaiting in the real estate market, Dubai offers many investment options for investors, like:

• Residential properties
• Commercial Properties

The diverse investment landscape of Dubai is offering investors from all around the globe fertile ground to work and invest in Dubai properties. It’s time to turn your dreams into reality.

9. Strategic location

Dubai is located at the crossroads of Europe, Asia, and Africa. Enjoying a strategic location and facilitating international trade, commerce, and travel.

Dubai is a gateway for many countries, east to west, because of major shipping routes that make it a vital hub for logistics.

World-class infrastructure and state-of-the-art airport facilities enhance connectivity and accessibility.

Global business and tourism destinations are attracting multinational corporations, investors, and travel seekers, providing facilities and experiences in the heart of the Middle East.

• 10. Fostering communal harmony

According to the UAE’s Ministry of Foreign Affairs, more than 200 nationalities are doing business, living, and studying in Dubai.

The progressive policies of Dubai promote social cohesion, fostering a sense of unity and tolerance among residents. Dubai is a safe haven that stands for inclusion, diversity, and security.

The US census only claims six ethnic categories: white, black, Asian, Amerindian/Alaska native, native Hawaiian/Pacific Islander, and mixed ethnicity.

Closing remarks

Investing in the real estate market in Dubai presents an opportunity for US and international investors seeking both stability and growth. The stable economy of Dubai is diversified across all sectors, and its strategic location is bridging all continents. Dubai offers a state-of-the-art platform for real estate investors.

Dubai is offering strong rental yields, producing high demand for properties, and providing higher returns on investment than the USA. Additionally, Dubai’s tax benefits—no tax on income, no property tax, and no capital gains tax—enhance profitability in real estate investments. In the USA, more or less a 1% property tax is imposed on investors.

World-class infrastructure and continuous government initiatives boost the real estate market while providing a friendly environment for real estate investment growth. According to our research, Dubai has great rental yields, buy-and-sell opportunities, and security for investors with a higher ROI than the USA, as mentioned in the comparison tables of ROI below:

Dubai

USA

Dubai and Abu Dhabi real estate markets are witnessing sustained strong demand backed by high rental yields, according to a study that paints a picture of a resilient and dynamic real estate sector, offering a range of opportunities for investors, residents and tourists alike.

The study released by a leading property platform reveals that demand for affordable villas and luxury apartments in Dubai continues to surge, while Abu Dhabi offers increased value on rents and high ROI (return on investment).

Primary data gathered by dubizzle from site visits and user behaviour in 2023 showcase positive trends across the board, driven by the UAE’s strong economic outlook and attractiveness as a place to live and work.

“Our 2023 Annual Property Market Reports for Dubai and Abu Dhabi not only highlight dubizzle’s leading position among real estate platforms but also shed light on the booming nature of the UAE’s leading property markets, “ said Haider Khan, CEO of dubizzle.

He said the data gathered from property seekers who generated over 77 million page views for listings on dubizzle for Dubai and nearly 14 million page views for Abu Dhabi in 2023, provides further evidence that the UAE’s property market is going from strength to strength, the report said.

The report highlights 2023 as the ‘Year of Affordable Villas’, with Dubai residents renting standalone homes in greater numbers. Affordable villa rentals increased by 16.64 per cent, with Damac Hills 2 emerging as the most popular affordable area for villa rentals, with an average yearly rent of Dh96,000. Other areas like Mirdif, JVC, and Dubailand also maintained a steady popularity, offering villas with annual rents below Dh200,000. Al Barsha, meanwhile, remained popular with those wanting larger, private spaces, boasting an average annual rental price of Dh388,000, followed by Jumeirah and the newer Dubai Hills Estate.

Some of the most significant rent increases in recent years were in areas like Dubailand and Al Barsha with 42.54 per cent and 31.08 per cent spikes respectively. JVC saw a rise of 32 per cent in the average year rent for apartments, and Damac Hills experienced a substantial increase of 66.67 per cent in annual rental prices.

“The trend for luxury apartments held sway in 2023, with Dubai Marina maintaining its status as the top luxury area for apartment rentals, with average annual rents surging to Dh148,000. Business Bay and Downtown Dubai also saw substantial increases in average yearly rent for apartments. Business Bay witnessed the highest increase in average rental prices for luxury apartments, with a rise of 21.05 per cent. Downtown Dubai became the third most popular area for apartment rentals, with an average annual rent of Dh214,000 in 2023, indicating a growing demand for high-end living in Dubai,” said the report.

Jumeirah Village Circle emerged as the top choice for affordable apartments, followed by Dubai Silicon Oasis and International City. In contrast, luxury flats in Dubai Marina, Business Bay, and Downtown Dubai garnered the most attention. Liwan and Green Community led the list with impressive ROIs of 9.46 per cent and 9.49 per cent, respectively based on projected rental yield.

Damac Hills 2 has emerged as the top area for affordable villas in Dubai, followed by Dubailand and Jumeirah Village Circle. Meanwhile, with an overall increase of 14.37 per cent, Dubai Hills Estate has become the most-searched area among buyers interested in luxury villas.

According to the report, Abu Dhabi is the only emirate where popular areas registered rent decreases, making it an appealing destination for those looking for more affordable rents. Areas such as Al Mushrif, Al Raha Gardens, Yas Island, Khalifa City, and Al Khalidiya all experienced drops in rental prices.

Luxury living is making a mark in Abu Dhabi, with Al Reem Island witnessing a 5.33 per cent increase in average annual rent for luxury apartments. This trend indicates a growing demand for high-end living spaces. Other areas, including Al Raha Beach and the Corniche Area, also saw significant increases in luxury apartment rentals, further solidifying the city’s appeal for luxury lifestyles. Yas Island and Saadiyat Island are also gaining traction for luxury apartment rentals.

When it comes to ROI, Abu Dhabi guarantees the highest rates. Al Mariyah Island led the way for luxury apartments with a 10.21 per cent ROI, while Al Reef offered an 8.1 per cent return for affordable apartments. Masdar City and Al Ghadeer also provided attractive returns at 7.39 per cent and 7.05 per cent respectively for affordable apartments. For those interested in affordable villas, Hydra Village offered a healthy 6.88 per cent ROI. Al Reem Island also presented an attractive 6.54 per cent return for luxury apartments, the report said.

Prime residential values in Dubai are expected to keep the upward momentum in 2024 after recording the world’s second-highest growth rate in 2023.

Knight Frank’s 2024 global prime residential markets forecast positions Dubai in third place at 5.0 per cent. This comes hot on the heels of an estimated 16 per cent rise in prime residential prices in 2023 and building on the 44.4 per cent rise registered in 2022.

Of the 100 markets tracked in Knight Frank’s Prime International Residential Index, 80 recorded flat or positive annual price growth. Across the world, prices of luxury property increased by an average of 3.1 per cent in 2023 with Manila (26 per cent) leading the rankings and Dubai (15.9 per cent) in the second spot. The Bahamas (15 per cent) comes in third place with the Algarve and Cape Town (both 12.3per cent) completing the top five.

PNC Menon, chairman and founder of Sobha Realty, said the UAE’s luxury real estate market would remain robust in 2024 due to the sustained demand for prime properties driven by a growing influx of foreign investors. “In particular, Dubai, ranked among the world’s most affordable luxury markets, has been able to better position itself as the destination of choice for high net worth buyers and business investors thanks to the diversity of prime properties available for purchase.”

He noted that the luxury real estate industry is modifying its strategy in response to the shifting economic environment by focusing on technological integration, immersive virtual experiences, and sustainable practices. “Smart houses, eco-friendly architecture, and wellness-focused amenities are becoming increasingly popular in response to the evolving needs and values of luxury property buyers,” said Menon.

According to Knight Frank, prime residential values in neighbourhoods including the Palm Jumeirah, Emirates Hills and Jumeirah Bay Island have experienced record growth during 2023, albeit this has been from a low base.

Faisal Durrani, partner and head of Research, Knight Frank Mena, said the total number of prime homes available for sale declined by 38.5 per cent in Dubai during 2023, echoing the 52 per cent decrease in sales inventory in Dubai’s Burj Khalifa over the same period. “Owners are clearly deciding to hold on to their homes for longer, with inventory levels falling sharply, signalling the longer-term residency mindset now bedding in amongst the increasingly dominant buy-to-hold purchasers. Unsurprisingly, this behaviour has helped to sustain price growth in the emirate’s prime market, which registered the second fastest rate of growth globally in 2023 at 15.9 per cent”

“The accolades for Dubai’s prime market are piled high following the city’s record-breaking 431 $ 10 million+ home sales, including an all-time high of 56 properties trading for over $25 million last year. Despite the record-breaking sales of luxury homes, Dubai ranks towards the bottom end of the most expensive prime markets globally,” Durrani said.

“Indeed, in our global tracker of 15 prime residential markets around the world, $ 1 million secures 979 square feet of residential space in Dubai, three-times more than London, New York, or Singapore and about 806 square feet more than first-placed Monaco, where $ 1 million buys around 172 square feet of space. Dubai remains one of the most affordable luxury markets in the world, which only adds to its appeal among the international elite who dominate the upper echelons of the market,” said Durrani.

“Dubai’s residential market is no longer emerging. It has emerged. The nature of buyers in the market is testament to this shift, as is the type of real estate being developed in the city, much of which would not look out of place in other global cities,” said Will McKintosh, regional partner and head of Prime Residential, Knight Frank Mena.

He said Dubai’s relative affordability, combined with an unparalleled lifestyle offering in one of the safest cities in the world means not only are international second home buyers zeroing in on the emirate, but residents in the city are staying for longer and putting down roots, which is fostering the emergence of highly sought-after communities away from the luxury beach-front mansions. “For instance, we found a balance in Jumeirah Islands, which offered both in terms of tranquil lake views, newly renovated contemporary style homes and convenient access to local amenities.”

According to an analyst at a real estate consultancy that has analyzed prime residential capital value growth in 30 major cities worldwide, Dubai and Sydney will be the top performers in the real estate market in 2024.

Dubai’s prime residential capital values surged by 17.4 per cent over 2023 and the average growth recorded 2.2 per cent across 30 cities. It is expected that property demands will grow between 4.0 per cent and 5.9 per cent in 2024. “Dubai holds numerous factors which generate property demand. It’s the most affordable city for home buyers with average capital values of $850 per square foot. Also, the city’s low cost of living, warm climate, world-class infrastructure, safety and stability and business-friendly environment make it the preferred choice for investors.”

Dubai's real estate sector, a pivotal component of the UAE's vibrant economy, continues to exhibit signs of robust growth and resilience, with property prices on a steady upward trajectory. This surge is fuelled by heightened demand from both domestic and international buyers, painting a promising picture for the future of the market.

According to a leading real estate research, Dubai is anticipated to witness a five per cent to seven per cent increase in residential prices. This growth is mirrored in Abu Dhabi, albeit at a slightly more conservative rate of three per cent to five per cent. The immediate future looks bright, with the next few months expected to continue this upward trend in transactional activity, price appreciation, and rental hikes.

The robustness of the UAE's property market is evident in the surge of transactions during the previous year, which was bolstered by strategic government initiatives and overall economic growth. Dubai, in particular, showcased a remarkable increase in property transactions, with new records set in both volume and value, underscoring the enduring appeal of the emirate's real estate offerings.

According to a report by Deloitte, average sales prices for residential property in Dubai increased by approximately 18 per cent year-on-year basis, reaching Dh1,332 per sqft in 2023, while average rents rose by approximately 26 per cent over the same period by the end of the year.

The narrative of growth is woven through every corner of the city, from the iconic Palm Jumeirah to the burgeoning communities in Dubai South and MBR City, each telling a story of progress and opportunity. Yet, it's not just the numbers that speak volumes; it's the underlying confidence in Dubai's market fundamentals and the visionary approach of its leaders and developers that drive this momentum. As sales prices and rents ascend, and with gross yields reflecting a healthy 7.2 per cent, the message is clear: Dubai's residential market is not just growing; it's thriving with vitality and promise.

Oliver Mitri, Co-Founder of Imobiliare Dubai, reflects on the current market dynamics, "The UAE's real estate market is experiencing an exciting phase of growth, driven by strategic government initiatives and a burgeoning economy. Our focus remains on showcasing Dubai's unparalleled investment opportunities to the global market, emphasizing the city's innovative projects and zero-tax benefits."

As developers and analysts forecast, the introduction of new units in the coming months is poised to meet the escalating demand, albeit with a cautious eye on the potential for oversupply in certain segments. This delicate balance between supply and demand will be crucial in maintaining the market's stability and ensuring continued growth.

The outlook for Dubai's residential real estate market remains optimistic, buoyed by continued interest from a global investor base, including from key markets such as India, China, the UK, Latin America and North America, alongside a preference for ready-to-occupy properties. This international attention, coupled with the city's strategic initiatives to welcome more travel and investment, sets the stage for sustained growth and diversification in the real estate sector.

Imobiliare Dubai, aligning with the upward momentum, has strategically positioned itself to capitalize on this growth, conducting roadshows in key international locations such as London, Greece and France to attract global investors. These initiatives highlight Dubai's status as a premier destination for real estate investment, further amplified by the city's dynamic economy and the launch of new, compelling projects.

With major developers leading new developments, the narrative of Dubai's real estate market continues to evolve, characterized by stability, growth, and a keen eye on future trends. As Dubai continues to evolve in 2024, the real estate sector remains a cornerstone of the emirate's economic landscape, promising opportunities, challenges, and an ever-expanding horizon for investors and residents alike.

Dubai:– Activity levels within the UAE’s real estate market remained solid over the last quarter of 2023, and this continues to drive performance.

Looking at the UAE’s office sector figures, given a marked increase in demand, rental performance in Abu Dhabi's occupier market has surged, with average Prime, Grade A, and Grade B rents recording growth rates of 0.5%, 3.4%, and 4.8%, respectively, in the year to Q4 2023. In Dubai, the total number of Ejari registrations reached 47,234 in Q4 2023, a 34.7% increase from the previous year. The current market conditions have pushed average occupancy rates to 92.6% as of Q4 2023, up from 88.1% a year earlier. Driven by increased take-up and limited stock availability, average Prime, Grade A, Grade B, and Grade C office rents in Dubai increased by 8.0%, 13.3%, 18.2%, and 20.3%, respectively, in the year to Q4 2023. Occupier activity has originated from a diverse range of sectors, in both Free Zone and Non-Free Zone locations. The pharmaceutical and financial services sectors, and particularly hedge funds and asset management firms for the latter, have been the two prominent sectors of demand.

In the residential sector, average apartment prices in Abu Dhabi increased by 1.1% in the year to Q4 2023, whereas average villa prices remained almost unchanged from the comparable period a year earlier. Rental activity in Abu Dhabi experienced a slowdown, with the total number of registrations in the last quarter of 2023 decreasing by 12.6% year-on-year. This decline was driven by an 18.4% drop in renewed rental registrations and a 2.2% decrease in new contracts registered. Despite the slowdown in activity, average apartment rents still managed to rise by 2.0% year-on-year, reaching AED 64,996. Over the same period, villa rents also saw a slight increase of 0.8%, reaching an average of AED 163,098.

Looking ahead, approximately 4,438 new residential units are expected to be completed in the coming year, with 69.1% expected to be delivered in Yas Island and Al Maryah Island.

In Dubai, average residential prices increased by 20.1% in the year to December 2023, with apartment and villa prices rising by 19.8% and 21.8%, respectively. In the rental market, a continued moderation in the rate of growth has been witnessed throughout the year, where average residential rents rose by 18.9% in the year to December 2023, down from the 19.2% growth registered in November 2023. In 2023, a total of 39,190 residential units expected to have been delivered, with 34.4% of this new stock estimated to have been completed in Meydan One, Downtown Dubai, and Business Bay. A further 68,880 units are expected to be handed over in 2024, with 22.7% scheduled for delivery in Business Bay, District Seven, and Damac Lagoons.

Looking at the hospitality sector, the total number of hotel visitors in Abu Dhabi reached 4.94 million in 2023, marking a 29.0% year-on-year increase and a 9.9% increase from the pre-pandemic levels. Similarly, in 2023, Dubai saw a 19.4% rise in international visitors compared to 2022, bringing the total to 17.15 million. Given these elevated visitation levels, the UAE’s average occupancy rate rose by 4.5 percentage points year-on-year in 2023. Over the same period, the average daily room rate (ADR) grew by 2.6%, and revenue per available room (RevPAR) saw a 9.0% increase, highlighting the strong performance of the hospitality sector. Looking ahead, the UAE's position as a global tourism and business hub, coupled with relaxed visa regulations, are expected to continue to drive growth in this sector’s key performance indicators (KPIs).

In the retail sector, leasing activity in Abu Dhabi's market slowed down in the last quarter of 2023, with the number of rental contracts registered dropping by 6.5% compared to the same period in 2022 to reach 6,913. This decline was driven by a 3.4% decrease in new contracts registered and a 7.9% drop in renewals. Over the same period, Dubai's retail market saw a marginal 0.7% increase in total rental registrations, reaching 17,894. However, within this, new registrations declined by 7.7%, while renewals grew by 5.6%. Despite the mixed performance in leasing activity, rental rates have risen across both cities. In Abu Dhabi, in the year to Q4 2023, average rents grew by 10.7% to reach AED 2,075 per square metre. Dubai saw an even stronger increase of 17.6%, with average rents reaching AED 490 per square foot. This growth reflects strong demand, particularly from the Food and Beverage sector, which includes both established international brands and a rising number of homegrown players expanding within Dubai and globally.

However, a potential challenge lies in the limited availability of quality retail space. This lack of available space in desirable locations could hinder market activity in the future.

Activity in the UAE's industrial and logistics market remained strong despite the limited stock availability. This has resulted in a more landlord-favoured market where occupiers are pressured to comply with landlords’ lease demands, and offered incentives are relatively constrained. In Abu Dhabi, the total number of rental contracts registered in the year to Q4 2023 saw a 15.3% increase. Over this period, new registrations increased by 24.0%, and renewed contracts rose by 9.6%. In Dubai, the total number of rental registrations marginally declined by 0.04% year-on-year according to Dubai Land Department data. Despite the heightened levels of demand but significantly depleted levels of available quality stock, we have seen new contracts registered fall by 26.4%, while renewals rose by 18.8%.

The persistent supply-demand imbalance continues to drive rental growth in both cities. In the year to Q4 2023, average rental rates in Abu Dhabi and Dubai grew by 7.3% and 14.8%, respectively. As of Q4 2023, average asking rents stood at AED 407 per square meter in Abu Dhabi and AED 43 per square foot in Dubai. Given these market dynamics, we expect that rental rates will continue to improve in the UAE's industrial and logistics sector, albeit at a slower pace. New institutional-grade stock is anticipated to reach record-high rates.

Taimur Khan, Head of Research – MENA at CBRE in Dubai, comments: “The UAE’s real estate market concluded another stellar year, with performance and activity levels reaching multi-year, if not historic, record highs in many sectors. Attention will now turn to the outlook for 2024, where, albeit reduced, but still material global economic headwinds are underlining concerns as to what extent these levels of performance could continue. Even with potential global economic downside risk, we anticipate that both performance and activity levels will resilient over the course of this year, albeit with growth rates expected to moderate in a number of sectors.”

The UAE’s real estate market is on track to record another stellar year after performance and activity levels reaching multi-year record highs in many sectors in 2023, analysts at leading real estate services and investment firms said.

Activity levels within the UAE’s real estate market remained solid over the last quarter of 2023, and this continues to drive performance, CBRE said in its UAE Real estate Market Review Q4 2023.

“The UAE’s real estate market concluded another stellar year, with performance and activity levels reaching multi-year, if not historic, record highs in many sectors. Attention will now turn to the outlook for 2024, where, albeit reduced, but still material global economic headwinds are underlining concerns as to what extent these levels of performance could continue. Even with potential global economic downside risk, we anticipate that both performance and activity levels will be resilient over the course of this year, albeit with growth rates expected to moderate in a number of sectors,” said Taimur Khan, head of Research – Mena at CBRE in Dubai.

In Dubai, average residential prices increased by 20.1 per cent in the year to December 2023, with apartment and villa prices rising by 19.8 per cent and 21.8 per cent, respectively. In Abu Dhabi, the residential sector saw average apartment prices increasing by 1.1 per cent in the same period, whereas average villa prices remained almost unchanged from the comparable period a year earlier.

“The macroeconomic sentiments for the UAE remain favourable. The non-oil sectors have seen significant expansion over the past two years, remain healthy, and are well positioned to grow over the next 12 months, which will benefit the real estate sector. However, there may be risks of oversupply for select assets across a few locations, which may limit any significant increase in average prices going forward,” said Swapnil Pillai, associate director of Research at Savills Middle East.

In Dubai, residential transaction activity grew by 29 per cent y-o-y to an all-time high of 118,200 units while the office real estate market witnessed a surge in demand in 2023, with some developments seeing yearly rental increases of more than 40 per cent, according to Savills.

The CBRE report noted that the rental activity in Abu Dhabi experienced a slowdown, with the total number of registrations in the last quarter of 2023 decreasing by 12.6 per cent year-on-year. This decline was driven by an 18.4 per cent drop in renewed rental registrations and a 2.2 per cent decrease in new contracts registered. Despite the slowdown in activity, average apartment rents still managed to rise by 2.0 per cent year-on-year, reaching Dh64,996.

Over the same period, villa rents also saw a slight increase of 0.8 per cent, reaching an average of Dh163,098. “Looking ahead, approximately 4,438 new residential units are expected to be completed in the coming year, with 69.1 per cent expected to be delivered in Yas Island and Al Maryah Island,” said the report.

In Dubai, the rental market had a continued moderation in the rate of growth throughout the year, where average residential rents rose by 18.9 per cent in the year to December 2023, down from the 19.2 per cent growth registered in November 2023. In 2023, a total of 39,190 residential units expected to have been delivered, with 34.4 per cent of this new stock estimated to have been completed in Meydan One, Downtown Dubai, and Business Bay. A further 68,880 units are expected to be handed over in 2024, with 22.7 per cent scheduled for delivery in Business Bay, District Seven, and Damac Lagoons.

In the hospitality sector, the total number of hotel visitors in Abu Dhabi reached 4.94 million in 2023, marking a 29.0 per cent year-on-year increase and a 9.9 per cent increase from the pre-pandemic levels. Similarly, in 2023, Dubai saw a 19.4 per cent rise in international visitors compared to 2022, bringing the total to 17.15 million.

Abu Dhabi's retail sector saw leasing activity slowing down in the last quarter of 2023, with the number of rental contracts registered dropping by 6.5 per cent compared to the same period in 2022 to reach 6,913. This decline was driven by a 3.4 per cent decrease in new contracts registered and a 7.9 per cent drop in renewals. Over the same period, Dubai's retail market saw a marginal 0.7 per cent increase in total rental registrations, reaching 17,894. However, within this, new registrations declined by 7.7 per cent, while renewals grew by 5.6 per cent.