Dubai: CBRE Middle East, the global leader in commercial real estate services and investments, released its latest edition of the UAE Real Estate Market Review for the third quarter of 2024.

Looking at UAE’s office sector, strong activity levels continued in Dubai against the backdrop of a very positive non-oil economy, which is driving new employment and resulting in robust year-on-year growth in the number of registered commercial Ejari leases. However, with limited new office deliveries recorded year to date, and or expected over the remainder of the year, Dubai’s office sector will remain a heavily landlord-friendly market adding further upward pressure to occupancy rates and rentals in the coming quarters. As of the end of the third quarter, the average occupancy rate of assets tracked by CBRE currently sits around 93%, up from 92% a year earlier. In line with the sustained demand, office rentals rates remain on an upward trajectory, with average Prime, Grade A, Grade B, and Grade C rates seeing growth of 11%, 21% and 24%, and 19% respectively as compared to Q3 2023. In Abu Dhabi, leasing activity also remained resilient through the third quarter. Average occupancy rates of assets monitored by CBRE increased to over 94%, up from 91% a year earlier. Similarly, office rentals have also continued to rise robustly, with average Prime, Grade A, and Grade B assets registering year-on-year increases of 18%, 6%, and 12%, respectively.

In Dubai, the residential market has again delivered a very solid performance during Q3 2024, with average prices registering close to a 20% as compared to the year prior. This increase has been underpinned by a 19% rise in average apartment prices and a 23% increase in average villa prices. In the year to September 2024, rental growth has also continued almost unwavering with 19% growth in average apartment rents and 13% growth in average villa rents. Rental contracts registered have continued to increase year-on-year versus the same period in 2023, primarily supported by a 14% increase in the total number of registered renewal contracts, whilst new registrations declined marginally. Dubai’s transaction volumes continue to rise, largely due to the sustained growth in the number of registered off-plan sales. In the nine months to September 2024, the total number of residential transactions topped 125,000, up more than 36% compared the same period in 2023. Residential sales values have also continued to climb, totaling AED 86 billion for off-plan transactions and AED 33 billion for ready, respectively. In total, Q3 saw nearly AED 120 billion in residential sales, which was up more than 30% on the same three-month period last year. Given the current lack of available supply, performance in Dubai’s residential sector is set to remain positive in the coming quarters for both sales and rentals.

In Abu Dhabi, almost 2,000 residential transactions were recorded in the third quarter of 2024, representing a -40% drop as compared to the same period last year. In the first nine months of the year, the total volume of transactions stood close to 7,000 sales, down by around 16% from the year prior. This was despite ready market sales increasing 43%, as off-plan sales registered a drop of 35%. During Q3 2024, Abu Dhabi’s average apartment prices registered a year-on-year increase of nearly 9%, and average villa prices grew by just over 8% during the same period. In the rental segment, total registrations fell slightly on the previous year, albeit the number of new contracts increased by 2% as tenants continued to favour newly completed projects against the aging legacy stock. Abu Dhabi’s average apartment rents increased by 9% in Q3 2024 as compared to a year earlier, whilst average villa rents grew by 4%. 

Looking at the hospitality sector, Dubai has continued to set new monthly visitor number records during 2024 and is on track to deliver the highest ever annual total, assuming momentum continues into the final quarter. In Abu Dhabi, the number of hotel guests surged to nearly 2.9 million in the six months to June 2024, registering a 20% year-on-year growth. Over this period, the number of international visitors in Dubai increased by 9.9%, reaching a total of 8.12 million. Average room rates (ADRs) have also remained broadly positive through YTD September, with Abu Dhabi seeing a 12% increase in ADRs year-on-year, RAK at 10% and Dubai 3%. RevPAR growth in Abu Dhabi was even stronger at nearly 24% increase from 2023, reflecting the low base which the market has being growing from.

The UAE’s retail market continues to perform strongly leading into the end of the year and with limited available supply and high occupancy rates, leading rental rates to continue to rise. Available retail supply remains particularly tight across Dubai, with most prime assets already running at close to full capacity, some even with extensive waiting lists of interested tenants. In Abu Dhabi, the dynamics are not quite as strong, major destination malls such as Yas Mall and Maryah Mall also continue to see increasing tenant demand and limited vacancy. Retail rents remained positive with average rates in Abu Dhabi increasing by over 8% year on year, and average Dubai rents rising by close to 3% during the same period. The short to medium term retail supply remains well below historical annual delivery norms, with delays to and redesign of several largescale mega malls and other super regional sized centres. Accordingly, rental rates are likely to see further growth over the next year, albeit on much more limited completed transactions, with registered Ejari leases barely seeing growth on either a quarterly or annual basis, due to the restricted availability. This dynamic was even more pronounced for new Ejari leases, with a -7% decline year-on-year versus the same 9-month period in 2023, reflecting the tightness of the market.  For Abu Dhabi, it was a similar pattern for registered Tawtheeq contracts.

The industrial and logistics sector continues to see supportive macro environment and positive fundamentals for new demand, which is resulting in more aggressive actions from Landlords, with rising rentals being quoted across available projects in locations most notably in prime areas of Abu Dhabi and North Dubai. The persistent lack of quality available assets ready for lease is however constraining market activity and creating a challenging environment for corporate occupiers, particularly on new lease negotiations. During the quarter, industrial Ejari registrations in Dubai were measured up by around 5% year-on-year, with new leases rising by 4% and renewals close to 6% for the same period. The total number of industrial Tawtheeq rental registrations in Abu Dhabi were relatively stable, although there was a 6% increase in the number of new registrations year-on-year. In the 12 months to Q3 2024, Dubai’s industrial warehousing rents have increased by more than 5%, rental growth has also been evident in Abu Dhabi, with 3% growth during the quarter and 9% in the 12 months to September. The strength of the non-oil economy has been fundamental to the growth of both markets over the past two years, and we expect the positive performance to continue into 2025, with occupier demand outpacing available accommodation.

Matthew Green, Head of Research MENA in Dubai, comments: “The UAE real estate market performance has remained robust through the third quarter with residential transactional activity continuing to reach new highs in Dubai, whilst the commercial office market in both Dubai and Abu Dhabi has seen sustained growth in rental and occupancy rates as demand for well-located high-quality accommodation outstrips available supply. The lack of short-term pipeline persists as a key challenge for multiple sectors, leading to an increase in the cost of living and doing business across the Emirates. However, whilst this may be a concern if prolonged, in the longer-term, for now, the non-oil economy remains buoyant and fundamentally supportive of further real estate growth over the next 12 months.” 

About CBRE Group, Inc. 

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2023 revenue). The company has more than 130,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.