• 6,700 residential units were delivered in Q1 2022, while an additional 31,000 units are forecast for the rest of 2022
  • Highest monthly residential transactions recorded over March 2022
  • Citywide average villa sales price up by 21% and apartments by 9% year-on-year
  • Citywide average villa rents up by 23% and apartments by 10% year-on-year
  • Q1 2022 city-wide office occupancy levels at 81%, the highest it has been in the last 5 years
  • Citywide office rents up by 15% year-on-year, with many districts surpassing pre-pandemic rental levels
  • Office demand continues to be led by the services and technology sectors, particularly by fin-tech firms

Dubai, UAE: According to CORE’s latest Dubai Q1 2022 report, “The recently announced property visa reforms and expanded categories for golden visas is expected to benefit a much wider range of residents and investors. While attracting tourists, global talent and inward investment, these visa regulations are expected to be an unprecedented catalyst for Dubai’s real estate market, a sector which is already witnessing strong demand.”

Residential Market

The report highlights “Dubai saw nearly 6,700 units being delivered in Q1 of 2022, while a further 31,000 units are expected over the remainder of the year, keeping the total forecast for 2022 at 38,000 units. Villas continue to form only a small fraction of 14% of all expected deliveries in 2022, while apartment units constitute the remainder. Realization rates may be slightly lower subject to supply chain issues, however, many developers are accelerating their completion timelines and aiming for handover this year in order to take advantage of favourable market conditions.”

Prathyusha Gurrapu, Head of Research and Advisory at CORE says, “Residential sales transaction volumes continue their upward trajectory, with March 2022 transaction volumes being the highest recorded in Dubai’s history. Overall secondary market transactions in Q1 2022 saw a 56% increase compared to Q1 2021 while the off-plan market saw a 120% rise.”

“While secondary market transaction volumes continue to be higher than the off-plan market, the off-plan market is making a stronger rebound after witnessing a sluggish recovery over the last two years. With the recently announced reforms on Golden visas linked to property investment, we expect a further boost to both the secondary and off-plan market.”

Prathyusha adds “Coming off from historically low new project announcements over the last few years due to COVID-19 and dampened market conditions, recent quarters have seen a sharp up-tick in new project launches with Q1 2022 launch volumes surpassing pre-pandemic levels, underpinned by the overall positive market sentiment. Several noted developers’ projects are witnessing strong absorption, boosting off-plan sales and demonstrating Dubai’s renewed investment momentum and consumer confidence.”

Prathyusha says “The trend of robust demand for prime residential continues in Q1 2022, with prime transaction volumes above AED 10 million being 139% higher than Q1 2021. The demand for the luxury market is stemming from both end-users and overseas investors looking to relocate or buy a secondary home in Dubai. While prime residential prices are well near 2014 peak prices, many buyers are largely agnostic to historical pricing and find Dubai prime waterfront property to be competitively priced compared to most global cities.”

Sales prices across districts have surpassed pre-pandemic levels with average citywide villa sales price up by 21% and apartments by 9% year-on-year. Similarly, citywide villa rental average is up by 23% and apartments by 10% year-on-year. While improving at record pace, both sales prices and rents are still below 2014 peak values. However, we expect at the current pace, city-wide villa market rents to reach the 2014 mark by the end of this year.

Prathyusha says “We are seeing many tenants trying to find support from the RERA rental index to avoid sharp rises that landlords are asking for during renewals. However, new leases are driven by market conditions with many landlords, particularly of units in sought-after buildings and districts achieve asking prices.”

Office Market

Office Supply: Over 480,000 sq. ft of total office space was delivered in Q1 2022 bringing the total Dubai office space to 107 million sq. ft. Major deliveries include two buildings in Park Heights Square in Dubai Hills by Emaar and the next phase of the Deira Enrichment Project by Ithra. Over the remainder of 2022, a further 1.07 million sq. ft of office space is forecast including Uptown 2020 in JLT, the next phases of CommerCity and the first phase of the District 2020 office portfolio.

Robert Thomas, Head of Agency at CORE says “We have seen occupancy levels improve steadily over the last few quarters across both Grade A and Grade B stock with Q1 2022 city-wide occupancy levels at 81%, the highest it has been in the last 5 years.”

“A surge in enquiries is coming from EU/UK and other international markets wanting to expand in Dubai due to its favourable and open business environment. In addition, Dubai is also seeing an influx of many international firms relocating their staff and operations from Russia and Ukraine. This trend is demonstrated by the record number of licences being issued and by a higher number of new Ejari registrations in Q1 2022”

Robert Thomas says “On the other hand, most relocation and consolidation activity was concluded over H2 2020 and 2021, with existing occupiers keeping their current offices due to lower and more attractive lease rates that they were able to achieve during or prior to COVID-19. Furthermore, while hybrid workplace strategies are in place, most firms are bringing their employees back to the office and retaining existing spatial footprint.”

Sectoral demand continues to be led by the services and technology fields, particularly Fin-tech. In addition, with progressive cryptocurrency regulations and frameworks in place, Dubai is attracting many cryptocurrencies related businesses.

Robert Thomas says “With most fitted and well-built supply witnessing strong absorption, we are seeing a race for quality stock across key office districts leading to growing upward pressure on headline rents and occupancy levels. While supply remains available in either shell and core condition or sub-par stock, the lack of quality units in sought-after buildings is driving average asking rents up across most of the Dubai office districts we track.”

The sharpest rises in average year-on-year office rents were seen in Sheikh Zayad Road (35%), One Central) (29%), Business Bay, JLT (29%) and Downtown Dubai (16%). Old Dubai districts of Bur Dubai, Deira and Garhoud which struggled to maintain headline rents for years are also reporting double digit rental increases.

Robert Thomas adds “We are witnessing a rising number of enquiries from new business centres and have seen prominent global flex-space operators and local providers see near full occupancy. Many freezones, large single landlords operated business centres and CAT B (ready to move in) spaces are also demonstrating a similar trend with very nominal availability. There is very limited sub 1,000 sq. ft fitted stock available in the market which is what is in demand for new entrants testing the market and is being rented at a premium.”

The report concludes “Due to a range of demand drivers driving both residential and office market sectors with demand outstripping supply in key segments, we expect the upward trajectory in enquiries, transaction volumes, prices and occupancy levels to continue, albeit with an interim marginal slow down during the summer months. However, it is important to note that inflation, supply chain disruptions, rising interest rates and pricing out of mid-market buyers and tenants are expected to be growing downside risks in the near-term.”

-Ends-

For further information or media queries, please contact:
Prathyusha Gurrapu, Head of Research & Advisory, CORE, prathyusha.gurrapu@core-me.com
Robert Thomas, Head of Agency, CORE, robert.thomas@core-me.com

About CORE: 

CORE is a leading full service commercial real estate consultancy. We advise private and institutional clients seeking to dispose, acquire, lease or develop commercial property in the UAE and provide integrated expertise across office, retail, industrial and hospitality asset classes.