The residential market in the UAE has kicked off 2024 with notable vigor, signaling robust activity and absorption rates that are anticipated to sustain price appreciation in both Abu Dhabi and Dubai throughout the year. This insight comes from CBRE Middle East, a leading authority in commercial real estate services and investments.

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In Abu Dhabi, there’s been a marked uptick in transactions, with a total volume of 2,795, reflecting a substantial 22.6% surge from the previous year. This surge is attributed to an 18.1% rise in off-plan sales and a substantial 34.5% increase in secondary market sales.

The average prices of apartments and villas in Abu Dhabi rose by 4.3% and 2.3%, respectively, in the year leading up to the first quarter of 2024.

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However, the rental market in Abu Dhabi experienced a slight dip, with 46,130 residential rental contracts, marking a 10.9% decrease from the previous year. This can be attributed to a decline in both renewed rental contracts and new registrations.

Despite this, average apartment and villa rents increased by 4.5% and 1.1%, respectively, over the same period. Supply-wise, only 80 units were delivered in Abu Dhabi during the first quarter of the year, primarily in Al Raha Beach, with an additional 8,660 units expected by year-end, predominantly in Yas Island, Al Sowwah, and Al Shamkha.

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In Dubai, there’s been a significant acceleration in price growth, with average prices surging by 20.7% in the year up to March 2024. Apartments and villas recorded increases of 20.4% and 22.1%, respectively.

Rental growth in Dubai also surged in 2024 after a period of moderation in the previous year. Average residential rents increased by 21.2% year-on-year, with apartments and villas witnessing hikes of 22.1% and 14.5%, respectively.

Transaction volumes in Dubai’s residential market reached a new high in March 2024, with off-plan and secondary market sales surging by 20.2% and 2.2%, respectively. The total number of transactions in the first quarter of 2024 also hit a record high, up 20.5% from the previous year.

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However, within the prime market segment, there was a slight decline of 2.1% in total sales transactions, primarily due to a decrease in off-plan sales.

In summary, CBRE anticipates continued price growth in both Abu Dhabi and Dubai’s residential markets, albeit at different rates, with Abu Dhabi’s prime areas expected to outperform the overall market. Meanwhile, Dubai’s residential sales market is projected to maintain an upward trajectory, albeit with a moderation in rental growth in the second half of the year.

Taimur Khan, Head of Research Mena in Dubai, commented: “The UAE’s residential market is off to a strong start in 2024, driven by heightened demand levels and reduced supply. Price growth is expected to continue, albeit at varying rates across different segments.”