Residential property prices in Dubai increased 4.4 per cent on average in the first eight months of the year, registering the highest annual growth since February 2015, according to real estate consultancy CBRE.
Average apartment prices increased 2.5 per cent and average villa prices increased 17.9 per cent, CBRE said in its third quarter market report on Thursday.
However, rents continued to decline, falling an average of 2.7 per cent in the 12 months to August 2021, according to the consultancy. Apartment rents in Dubai fell 5.2 per cent over the same period, while average villa rents rose 15.5 per cent.
“Market sentiment, in almost all real estate sectors in the UAE has certainly improved over the course of the year, which has, in turn, underpinned activity levels,” Taimur Khan, head of research – Mena at CBRE in Dubai, said. “While there are still headwinds which are tapering performance, we do expect price performance to begin to improve in the not-too-distant future.”
The UAE property market, which softened due to a three-year oil price slump that began in 2014 and oversupply concerns, is showing signs of recovery as people upgrade to larger homes with outdoor amenities amid a remote working and learning trend sparked by Covid-19.
Economic support measures and government initiatives – such as residency permits for retirees and remote workers, and the expansion of the 10-year golden visa programme – have also helped to improve sentiment.
Residential transaction volumes in Dubai were up 76.8 per cent in the first eight months of the year, while secondary market transactions jumped 120.7 per cent and off-plan transactions rose 39 per cent, according to CBRE.
Sales volumes in Dubai in the first three quarters of 2021 have already surpassed total annual transaction volumes in all but two of the past 10 years, the consultancy said.
New residential supply in Dubai totalled 24,595 units until August and an additional 24,700 units are likely to be delivered in the remainder of the year, according to CBRE data.
Meanwhile, average residential prices in Abu Dhabi increased 2.2 per cent in the year to August, with average apartment prices rising 1.9 per cent and average villa prices increasing 3.1 per cent, the report showed.
House rents in the capital city fell 4.7 per cent in the 12 months to August, according to CBRE.
Only 1,853 units have been delivered so far this year in Abu Dhabi. An additional 9,388 units are scheduled for delivery in the remainder of the year.
“However, it is very unlikely we will see this full quantum delivered,” CBRE said.
Dubai’s office market witnessed an increasing number of new entrants, including international and local technology firms, FinTechs and Chinese companies, which pushed the average occupancy rate up 78.8 per cent in the third quarter of 2021, from 77.1 per cent in the second quarter, the report said.
“The UAE office market continues to be very much tenant-favourable overall and landlords are becoming more proactive in attracting and securing tenants, offering a range of incentives including rent-free periods,” CBRE said.
The increase in the number of daily flights to the UAE following the relaxation of Covid-19 restrictions also led to a boost in the hospitality sector.
The average occupancy rate rose 11.4 percentage points year-to-date, while the average daily rate increased 2.3 per cent and average RevPAR (revenue per available room) jumped 26.1 per cent, CBRE said.
Retail activity in Abu Dhabi and Dubai stood at 1.9 per cent and 0.3 per cent above their respective pandemic baselines, the report added.
“In Dubai, we have seen a number of international and local brands looking to either enter the market or expand their current operations into new retail offerings across the city. Demand for space stems from supermarkets, pharmacies and quick-service restaurant operators, with these occupiers looking to serve increasing demand levels in new retail locations,” the report said.
However, retail rents in both Abu Dhabi and Dubai remained under pressure. Average rents fell 16.4 per cent in Abu Dhabi and 10.5 per cent in Dubai in the first eight months of the year, CBRE said.