The latest JLL’s UAE Market Dynamics report, published on Wednesday, indicates that the UAE real estate market experienced significant growth in the third quarter of 2024, despite challenges in the global market.

In Dubai’s residential market, transactions of off-plan properties rose by 50.3% compared to the same quarter the previous year, leading to an overall increase in total sales transactions of 35.6% year-to-date. The residential sector in Abu Dhabi also showed strong performance — secondary market sales climbed by 44.3% in Q3, where apartments increased by 8.5% and villas by 8.1% from the previous year.

Rising sales numbers show the market’s strength and healthy economic support.

Off-Plan sales expand housing market

During the third quarter in Dubai, developers finished 7,400 residential units, and an additional 13,500 are anticipated in the fourth quarter. Rental apartment prices rose by 19.1%, while villa rental prices increased by 12.5%. This indicates a strong demand for quality housing in well-kept neighborhoods. Since demand is outpacing the available properties, renewals of leases climbed by 14.1%, representing 62.0% of all rental contracts. The upcoming housing supply in the fourth quarter should contribute to rent stabilization, encouraging developers to enhance existing communities and initiate new projects in peripheral areas.

As for Abu Dhabi, apartment rents increased by 9.3%, and villa prices increased by 3.9%. On the other hand, off-plan sales fell by 67.2%, resulting in a 40.8% decrease in total transactions compared to the prior year. It is expected that luxury properties will perform the best in the fourth quarter, attracting more buyers than those in the broader market. While there were few new home completions in the third quarter, around 3,500 units are set to be finished in the fourth quarter.

Hotel industry flourishes with tourism growth

Abu Dhabi’s hospitality market is performing well — 2.4 million guests arrived from January to May 2024, especially in popular areas such as Yas Island and Saadiyat Island. By September, key metrics indicated notable growth: occupancy rates rose by 7.1%, the average daily rate (ADR) reached AED 527 (an increase of 12.2%), and revenue per available room (RevPAR) climbed by 23.6%. The Abu Dhabi Tourism Strategy 2030 and upcoming events indicate this trend is likely to continue into the fourth quarter.

Dubai’s hotel industry is also experiencing growth, with RevPAR rising 2.7% compared to the previous year up to September, driven by increased tourism. New luxury developments such as Marsa Al Arab and Dubai Islands are underway, while existing hotels are adjusting their pricing strategies to attract guests who are becoming more cost-conscious. This has led to heightened competition among all types of hotels, compelling them to enhance their services. Despite global economic uncertainties, the sector remains robust and positioned for continued expansion.

Quality commercial spaces in high demand

In the commercial market of Abu Dhabi, the strong demand for high-quality office space, particularly Prime and Grade A types, led to an average rent increase of 10.8% in the third quarter of 2024 compared to the previous year. Total rental registrations surged by 44.4%, fueled by a 65.9% rise in new registrations and a 7.7% increase in renewals. With only 4.1% of the space remaining vacant and increasing demand from both existing and new businesses, growth is anticipated to persist into the fourth quarter when 70,100 square meters of new office space will be released.

In Dubai, the limited availability of Grade A office spaces is pushing rents higher, especially in the central business district (CBD), where only 5.2% of the space is vacant. This scarcity is prompting companies to rethink their expansion strategies and to renew the current leasing activity instead. The increases in rent varied by property classification: Prime office rents rose by 8.3%, Grade A rents increased by 14.7%, and Grade B rents went up by 15.3% compared to the previous year. Lease renewals expanded by 7.8% year-on-year, while the number of new leases saw a modest increase of 2.3%. A division is emerging within Dubai’s commercial market, where local and regional firms are more inclined to pay premium rents, in contrast to international corporations, which are adopting a more cautious approach.

F&B and innovation lead retail transformation

In the retail sector of the Dubai real estate market, significant growth in tourism and population positively impacted the performance in the third quarter, particularly for high-quality retail spaces. Rents in super-regional malls rose by 14.9% compared to the previous year due to strong demand. Prime locations are experiencing a rise in lease renewals, and in the food and beverage sector, landlords are showing a preference for well-established international brands. The fourth quarter is anticipated to introduce new retail experiences to accommodate evolving consumer needs.

During the third quarter, Abu Dhabi’s retail market experienced strong demand but faced a shortage of quality space. Food and beverage businesses were the main contributors to growth, and international brands were actively searching for prime locations. Rents increased by 3.8% from the previous year, with community malls witnessing the highest rise at 9.0%. Overall, rental registrations saw a 10.1% increase, driven by a significant 38.2% rise in new registrations. An additional 20,100 square meters of gross leasable area is projected to be added in the fourth quarter.

Institutional-grade assets define industrial growth

The industrial and logistics market in Dubai performed well in the third quarter, experiencing a rental registration increase of 7.9% and a 12.9% rise in rents as of September. Developers are cautious about new constructions without secured tenants despite the rapid occupancy of new properties. It is anticipated that high-quality properties will drive market growth in the future.

In the Abu Dhabi real estate market, there is significant demand in the industrial and logistics market, particularly for quality properties in well-established areas such as KEZ, which currently has a 92% occupancy rate. In the third quarter, rental registrations surged by 32.9%, while warehouse rents rose by 8.6%, reaching AED 380 per square meter compared to the previous year. New projects are underway to satisfy this increasing demand. The Abu Dhabi Industrial Strategy is fostering investment and promoting growth, especially in high-quality properties.

Taimur Khan, Head of Research MEA at JLL, said: “The UAE real estate market is demonstrating exceptional resilience, displaying strong growth across all sectors despite global challenges. Investors maintain confidence in both Dubai and Abu Dhabi, and this trend is likely to persist, bolstered by government initiatives and new world-class developments. There is a noticeable preference for high-quality properties that achieve higher prices. We anticipate continued growth through the fourth quarter of 2024 and beyond, creating opportunities for both local and international investors.”