• Limited Grade A office supply pushes rents higher in Q3, dropping vacancy rates to 4.1% in Abu Dhabi and 5.2% in Dubai
  • Innovative retail experiences gather pace in Dubai while international brands eye prime retail locations in Abu Dhabi
  • Abu Dhabi’s hospitality market sees impressive growth with RevPAR up 23.6% YTD September; rising tourism maintains sector’s dynamism in Dubai
  • Institutional-grade assets to drive industrial and logistics market in Dubai and Abu Dhabi in Q4

Dubai, UAE – The UAE real estate market defied global headwinds in the third quarter of 2024, maintaining strong momentum and robust activity across all sectors, according to JLL’s latest UAE Market Dynamics report. High transaction volumes and an upward trajectory underscore the market’s resilience, fuelled by strong economic fundamentals.

Taimur Khan, Head of Research MEA at JLL, said: “The UAE real estate market demonstrates remarkable resilience, achieving robust growth across all sectors despite a challenging global outlook. Investor confidence remains strong in both Dubai and Abu Dhabi, and this upward trajectory is expected to continue, driven by strategic government initiatives and the ongoing development of world-class destinations. We are seeing a clear flight-to-quality trend, with prime assets commanding premium prices. In Q4 2024 and beyond, we anticipate sustained growth with opportunities for both local and international stakeholders.”

Off-plan sales shape residential landscape

A surge in transaction volumes in off-plan properties, which recorded a 50.3% YoY growth in Q3, set the pace for the upward swing in Dubai’s residential market with sales transactions rising 35.6% year-to-date. 7,400 units were delivered in Q3, with another 13,500 slated for Q4. Rent increases for apartments (19.1%) and villas (12.5%) reflect strong demand for quality accommodation in well-serviced communities. As robust demand continues to outpace supply, lease renewals rose 14.1%, accounting for 62.0% share of rental registrations. New supply is expected to stabilise rental rates in Q4, prompting developers to enhance existing communities and launch new master-planned developments in secondary locations.

Abu Dhabi's residential market saw a 44.3% rise in secondary market sales in Q3, with apartment and villa prices up 8.5% and 8.1% YoY, respectively. Rents also rose, with apartments up 9.3% and villas up 3.9%. However, off-plan sales declined 67.2%, impacting overall transactions which fell 40.8% YoY. The flight-to-quality trend is expected to drive demand for prime properties in Q4, outperforming the broader market. Limited new supply entered the market in Q3, but 3,500 units are expected in Q4.

Surging tourism numbers drives hospitality growth

Abu Dhabi's hospitality market is enjoying robust performance, driven by surging visitor numbers as the capital’s hotels welcomed 2.4 million guests from January to May 2024, especially at key destinations like Yas and Saadiyat Islands. YTD September saw impressive growth: occupancy was up by 7.1%, ADR rose 12.2% to AED 527, and RevPAR went up 23.6%. Government initiatives, like the Abu Dhabi Tourism Strategy 2030, and upcoming events promise continued growth in Q4.

Dubai's hospitality market continues to trend higher, and YTD September saw a 2.7% YoY RevPAR increase, driven by rising tourism. While mega-developments like Marsa Al Arab and Dubai Islands promise to redefine luxury, existing hotels are adjusting rates to maintain occupancy amidst price sensitivity. This is intensifying competition across all segments, pushing operators to elevate guest experiences and offerings. Despite global uncertainties, the sector remains dynamic and poised for continued growth.

Strong demand for quality commercial spaces

Continued demand for Prime and Grade A assets in Abu Dhabi’s occupier market drove a 10.8% YoY increase in average rents in Q3 2024. Rental registrations surged 44.4%, fuelled by a 65.9% rise in new registrations and a 7.7% increase in renewals. Limited vacancy (4.1%) and growing demand from both incumbent and new market entrants are expected to boost growth in Q4 when 70,100 sq. m. of office space is added to the total stock.

Limited availability of Grade A office space in Dubai is pushing rents higher, especially within the CBD where vacancy rates dropped to 5.2%. With such limited availability, occupiers are reevaluating expansions plans, and are having to renew leases.  More so, Prime office rents rose by 8.3%, Grade A rents by 14.7% and Grade B by 15.3% YoY. Renewals went up by 7.8% YoY, compared to just 2.3% for new leases. Dubai’s commercial market is bifurcating with local/regional companies more willing to pay premium rents than the cautious international corporates.

F&B and innovative experiences steer retail expansion

Boosted by tourism and population growth, Dubai’s retail sector saw a strong performance in Q3, setting the pace for continued growth of prime and Grade A retail space in Q4 as well. High demand for retail space in Q3 drove 14.9% YoY increase in rents for super-regional malls. Demand for prime locations are fuelling lease renewals while increased competition in the F&B sector is prompting landlords to favour experienced international brands. In Q4, innovative retail experiences will cater to meet evolving consumer demands.

Strong demand and limited quality stock defined Abu Dhabi’s retail market in Q3 as F&B remained dominant, with more international brands eyeing the capital’s prime locations. This landlord-favoured market witnessed 3.8% year-on-year rent increase, with community malls leading the charge at 9.0%. Rental registrations increased 10.1% YoY, with new registrations up 38.2%. In the next quarter, around 20,100 sq. m. of GLA is expected.

Institutional-grade assets drive industrial market

Dubai's industrial and logistics market saw buoyant Q3 leasing activity, with rental registrations up 7.9% YoY and rents up 12.9% YTD September. While new developments are being absorbed quickly, developers remain cautious about speculative projects. In the upcoming period, institutional-grade assets will continue to drive the market.

Abu Dhabi's industrial and logistics market is experiencing robust demand, particularly for high-quality assets in established locations like KEZAD, which boasts 92% occupancy rate. While rental registrations surged 32.9% in Q3, warehouse rents increased 8.6% YoY to AED 380 per sq. m. new developments are underway to address limited availability. Government initiatives such as the Abu Dhabi Industrial Strategy are attracting investment and driving further growth, with institutional-grade stock leading the way.

About JLL

For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500 company with annual revenue of $20.9 billion and operations in over 80 countries around the world, our more than 105,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com

About JLL MEA

Across the Middle East and Africa (MEA) JLL is a leading player in the real estate and hospitality services markets. The firm has worked in 35 countries across the region and employs over 1950 internationally qualified professionals across its offices in Dubai, Abu Dhabi, Riyadh, Jeddah, Al Khobar, Cairo, Casablanca, Johannesburg and Nairobi. For further information, visit jll-mena.com

Media Contact:
Medha Sandrasagara
Medha.Sandrasagara@jll.com

Nisha Celina | Janine Alamir
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