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Record-breaking figures were observed in terms of individual unit sales values, transactional volumes and project launches in 2023
February 08, 2024 | Staff Reporter | UAE | Developers
According to the Asteco 2023 Q4 real estate report, the UAE market witnessed unprecedented growth during 2023 despite the various global challenges. The report anticipates continued positive trajectory over 2024. Key strategic initiatives, including the UAE Tourism Strategy 2031 and ‘We the UAE 2031’, are expected to fortify the UAE's standing as one of the premier destinations globally.
In 2023, record-breaking figures were observed in terms of individual unit sales values, transactional volumes and project launches. The luxury market attracted significant attention, showcasing some of the most remarkable transactions to date.
The report indicates that during 2023, the Abu Dhabi real estate market marked the delivery of approximately 6,500 residential units distributed across key international investment zones such as Al Raha Beach, Al Reem Island, Yas Island and Saadiyat Island. Noteworthy residential projects were launched throughout the year, in key locations including Yas Island, Al Reem Island, Ghantoot, Saadiyat Island and Balghaiylam.
The market also welcomed the entrance of new developers, enriching the landscape and contributing to the diverse range of offerings. Prime and high-quality apartments experienced substantial annual increases, ranging from 5% to 10%, contributing to an overall average annual growth of approximately 3% across the market.
The villa market continued to exhibit robust demand, particularly in new communities of Saadiyat Island and Yas Island, observing average increases of close to 10% last year. Office rental rates recorded a notable surge with increases ranging from 5% to 10%, driven by a scarcity of prime office space, heightened demand from expanding businesses and proactive government initiatives aimed at attracting foreign investment.
In 2024, Abu Dhabi is poised for growth with projects currently in the planning stage slated for launch and an anticipated completion of over 7,000 residential units.
In 2023, Dubai recorded a flurry of new project launches. The launches (by volume of units) reached levels not seen since pre-Global Financial Crisis (GFC). Residential supply increased significantly with the delivery of an estimated 34,950 residential units (13% increase from 2022), comprising 27,450 apartments and 7,500 villas.
Meanwhile, the commercial sector registered the delivery of approximately 650,000 sq. ft. of new office space. Whilst residential rental rates continued their upward trajectory, rental growth slowed towards the end of the year. Average apartment and villa rents increased by 2% and 3% over the last quarter of 2023, and by 15% and 14% year-on-year (YoY).
Asteco anticipates the delivery of over 45,000 residential dwellings and approximately 500,000 sq. ft. of office space over the course of 2024. It is worth noting that, as in previous years, certain projects may face delays, potentially leaning into 2025.
Market sentiment in Al Ain remains optimistic, with positive demand observed across all main asset classes. Apartment rental rates remained broadly stable over 2023, with selective corrections in lower-quality properties. Conversely, high-quality villas experienced notable rate increases, ranging from 3% to 5% respectively. The office sector experienced an uptick in demand, marked by an increase in absorption rates.
Moving to 2024, the report anticipates a continuation of the stable-positive trajectory observed over 2023. Asteco observes that the groundwork laid in 2023 positions the Northern Emirates real estate market for sustained growth in 2024.
