Abu Dhabi sees 72.2% jump in real estate transactions in Q1, 2023

High demand across all sectors continue to boost growth in the Abu Dhabi’s real estate market

Staff Report

Dubai, UAE

Abu Dhabi witnessed a 72.2 percent jump in real estate transactions to 2,194 in the first quarter of 2023, according to a market update by CB Richard Ellis (CBRE), a global real estate advisory.

“This growth has been underpinned by a 131.5 percent increase in off-plan sales, whereas secondary market sales have dropped by 0.2 percent,” CBRE said in the report.

Average apartment prices in Abu Dhabi increased by 1.4 percent in the year to March 2023, and average villa prices increased by 1.6 percent. Based on transactional data recorded in the first quarter of 2023, average apartment prices in Abu Dhabi stood at Dh14,371 per square metre, and average villa prices stood at Dh11,683 per square metre.

In the rental market, in Q1 2023, as many as 47,157 rental contract registrations were recorded, a growth of 1.2 percent compared to previous year. Over this period, new registrations have dropped by 2.8 percent, whereas renewals have grown by 3.7 percent.

In the year through March 2023, average apartment rents dropped by 0.7 percent, whereas average villa rents grew by 1.1 percent. Considering recent rental registrations, as at Q1 2023, average asking rents for apartments and villas have reached Dh64,984 and Dh160,177, respectively.

On the supply front, in the year to date to March 2023, only 272 units were delivered, with new stock in Al Raha Beach and Shams Abu Dhabi accounting for all of this new stock. Over the remainder of the current year, 7,306 units are anticipated to be completed, with 52.2 percent of this upcoming supply being located in Yas Island, Al Sowwah, and Al Maryah Island.

Abu Dhabi Offices

Abu Dhabi’s occupier market continued to improve, with average Prime, Grade A and Grade B rents recording growth rates of 19.1 percent, 8.8 percent, and 10.7 percent respectively in the year to Q1 2023. 

The total number of rental registrations has grown by 10.8 percent. Over this period, new registrations have increased by 10.6 percent and renewals by 10.9 percent.

The market-wide average occupancy rate in institutional-grade buildings tracked by CBRE has reached 92.8 percent in Q1 2023, up from 81.5 percent a year earlier, a growth of 11.3 percent.

Abu Dhabi Hospitality

Abu Dhabi’s hospitality sector has registered growth rates of 23 percent and RevPARs surpassing its pre-pandemic levels by 22.3 percent.

According to recent data published by STR Global in March 2023, there are 119,505 hotel keys in the pipeline within the MENA region, down by 5.8 percent from a year earlier. The UAE accounts for a significant proportion of this pipeline, with a total of 22,324 keys in the pipeline, the second highest after Saudi Arabia.

Retail Sector

Abu Dhabi’s retail rents have registered a 5.6 percent year-on-year increase to Dh 1,875 per square metre in the first quarter of 2023.

Leasing activity remained relatively solid over the past quarter. In Abu Dhabi, 8,028 rental contracts have been registered as of Q1 2023, marking a year-on-year growth of 6.5 percent. The number of new registrations decreased by 1.5 percent, whilst renewed rental contracts rose by 11.0 percent.

The development of entertainment and experience-led offerings, such as those on Yas Island and Saadiyat Grove, are complementing core offerings in existing locations near Downtown Abu Dhabi. More so, over the quarter we have seen rising activity levels from new market entrants as well as existing occupiers expanding their footprint.

Industrial Growth

The UAE’s industrial and logistics sector continued to showcase strong leasing activity as well, specifically in the automotive, e-commerce, consumer goods, manufacturing, and the SME sectors. In Q1 2023, the total number of rental registrations in Abu Dhabi has increased by 8.5 percent, in the year through Q1 2023, where new registrations have dropped by 4.0 percent, whereas renewals have increased by 18.2 percent.

The lack of new development over recent years, paired with the elevated levels of demand from both new and existing market players, has led to a scarcity of quality stock in both Abu Dhabi and Dubai. As a result, we saw average rents in Abu Dhabi grow by 5.9 percent, in the year to the first quarter of 2023. Lease rates in Abu Dhabi reached Dh389 per square metre, and in Dubai, Dh 39 per square foot as of Q1 2023.

Despite the challenging global economic backdrop hampering growth, the UAE’s real estate market had a very strong start to the year, with high activity levels being recorded in Q1 2023 across all sectors and the economic prospects remain buoyant. Still, given the nature of its economy, there is some uncertainty around the potential long-term impact that slower global growth may have on it. However, the UAE’s strong fiscal position, easing of business regulations and strong levels of inbound investment levels, expected to minimize the risks.

Taimur Khan, Head of Research – MENA at CBRE in Dubai, said, “The UAE’s real estate market has maintained strong levels of demand during the first quarter of 2023, which has continued to underpin performance across all sectors. Whilst we do expect a moderation in growth rates going forward, we anticipate that the market will continue its performance trajectory over the course of the year. Where we are likely to see a slowdown, it will be driven by a shortage of supply, primarily in the industrial, office and prime retail sectors.”

 

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