The Dynamics of some of the Gulf Real Estate Markets | Kanebridge News
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The Dynamics of some of the Gulf Real Estate Markets

The real estate landscape in some of the Gulf region presents a study in contrasts, with Abu Dhabi experiencing an unprecedented boom, Dubai rolling out attractive offers, and Oman witnessing a decline in transactions at the outset of 2024.

Wed, Mar 20, 2024 10:09pmGrey Clock 3 min

The dynamic shifts observed across these markets highlights Abu Dhabi‘s remarkable growth in transaction value and volume, Dubai’s strategic marketing moves to captivate Ramadan buyers, and Oman’s challenging start to the year.

Through examining the strategies, results, and economic indicators driving these changes, below we will shed the light on the complexities and opportunities within some of Gulf’s real estate sector.

 

Abu Dhabi’s Real Estate Experiences Unprecedented Growth

The real estate market in Abu Dhabi has witnessed significant expansion, with a notable surge in the value and number of transactions. The Abu Dhabi Real Estate Centre (ADREC), an affiliate of the Department of Municipalities and Transport (DMT), reported that real estate transactions amounted at AED87.1 billion ($23.7 billion) last year. This marks a significant jump of 159.5% in the value of buying and selling activities, totaling AED61 billion ($16.6 billion), when compared to the year 2022. The increase is attributed to 15,653 transactions, indicating a 73.7% rise from the previous year.

The total number of transactions, including buying, selling, and mortgage transactions, registered a growth of 12.2% compared to 2022. The count of these transactions surpassed 22,751, marking an increase of 19.5% from the year prior.

Additionally, ADREC noted a growth in both resident and non-resident investor participation in 2023, signifying the real estate market’s diversity. The year saw the registration of 9,448 new investors and 1,098 non-resident investors, marking increases of 71% and 175% respectively from 2022.

This growth underscores Abu Dhabi’s position as a prime destination for real estate investment, reflecting the leadership’s vision and the ongoing progress and expansion of the emirate’s real estate market.

ADREC’s efforts are aimed at enhancing Abu Dhabi’s global appeal in the real estate domain and fostering growth across the real estate ecosystem, attracting both local and international investment.

 

Dubai Real Estate Offers Attract Buyers During Ramadan

In Dubai, the leading real estate developers are introducing appealing offers, including price reductions and fee waivers, to attract buyers during Ramadan. Developers like Danube, Tiger Properties, and DAMAC Properties are implementing significant discounts and promotional strategies.

Offers include up to 15% discounts on payment plans, full furnishing, and partial waivers on Dubai Land Development fees, tailored to draw buyers in what is traditionally seen as a slower period for real estate purchases.

This Ramadan season is described as presenting unique investment opportunities, with developers launching targeted promotional campaigns. Additionally, adjustments in administrative processes due to shortened working hours are advised for smooth transactions.

Despite a seasonal perception of slowdown, the Dubai real estate market remains active, with a significant portion of business occurring post-iftar. This adaptability and continued investor interest highlight the market’s robustness.

 

Oman Real Estate Sees Decline in Transactions

In contrast, Oman’s real estate market experienced a downturn in January 2024, with transactions decreasing by 20.2% to OR207.8 million ($540 million), compared to OR260.5 million ($677 million) in the same period of 2023.

Traded value of sale contracts decreased by 14.7 per cent to OR101m ($262.3m) at the end of January 2024, while the number of sale contracts rose by 6.6 per cent to 6,124.

Oman real estate traded value of mortgage contracts decreased by 25.4 per cent to OR105.4m ($274m) compared to OR141.3m ($367m) during the same period of 2023.

Despite the decrease in the traded value of sale and mortgage contracts, there was a slight increase in the fees collected for legal actions, indicating a mixed outlook for Oman’s real estate sector.



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UAE Residential Market Review Shows Strong Growth and Record Transactions in Q1 2024

The total transaction volume in Abu Dhabi for the first quarter of the year reached 2,795.

Thu, May 16, 2024 4 min

The CBRE Middle East, a global leader in commercial real estate services and investments, released its latest edition of the UAE Residential Market Review for the first quarter of 2024.

Abu Dhabi Market Overview

During the first quarter of the year, the total volume of transactions in Abu Dhabi stood at 2,795, registering a 22.6% increase compared to the year prior. This increase has been underpinned by an 18.1% rise in off-plan sales and a 34.5% rise in secondary market sales. In the year to Q1 2024, Abu Dhabi’s average apartment and villa prices increased by 4.3% and 2.3%, respectively.

Abu Dhabi’s rental market witnessed a total of 46,130 residential rental contracts in Q1 2024, registering a decline of 10.9% from the year prior. This has been due to a 15.5% decline in the number of renewed rental contracts registered and a 2.4% drop in new rental registrations over the same period. In the year to Q1 2024, average apartment and villa rents have increased by 4.5% and 1.1%, respectively. On the supply front, only 80 units have been delivered in Abu Dhabi in the first three months of the year, with all of this new stock being in Al Raha Beach. An additional 8,660 units are expected to be completed by year-end with 55.8% of this scheduled stock located in Yas Island, Al Sowwah, and Al Shamkha.

Dubai Market Insights

In Dubai, price growth has continued to accelerate during the first quarter of 2024, with average prices increasing by 20.7% in the year to March 2024. Throughout this period, average apartment and villa prices increased by 20.4% and 22.1%, respectively. Although headline average sales rates are still marginally below the 2014 highs by 0.1%, several prominent residential neighbourhoods have already surpassed their 2014 figures.

As of March 2024, average apartment prices stood at AED 1,486 per square foot, and average villa prices reached AED 1,776 per square foot. Average villa sales rates are currently above their 2014 baseline by 22.9%. Rental growth has also gained momentum in 2024, after a period of moderation in 2023. In March 2024, average residential rents registered a year-on-year increase of 21.2%, up from the 20.4% growth registered a month earlier. Over this period, average apartment and villa rental rates grew by 22.1% and 14.5%, respectively. Data from the Dubai Land Department revealed that, in the year to date to March 2024, the total number of rental registrations stood at 159,941, marking an increase of 5.8% from the previous year. As for supply, a total of 6,526 units were delivered in the first quarter of the year, with 59.7% of this supply being located in Meydan One, Jumeirah Village Circle, and Al Furjan. A further 46,086 are expected to be handed over the remainder of the year. However, given historic materialisation rates, the report expects that a limited portion of this upcoming stock will come online as planned.

Record-Breaking Transactions

March 2024 witnessed another record in Dubai’s residential market, with transaction volumes reaching the highest monthly figure on record, marking a year-on-year growth of 13.2%. Throughout this period, off-plan sales and secondary market sales increased by 20.2%, and secondary market sales increased by 2.2%.

In the first quarter of 2024, Dubai’s total transaction volumes reached 35,310. This is the highest total ever recorded in the first quarter of the year, marking an increase of 20.5% from the year prior. Over this period, off-plan transactions recorded an increase of 23.9%, and secondary market transactions rose by 15.2%.

However, in Q1 2024, the total number of sales transactions within the prime market segment registered a decline of 2.1% compared to the year prior. Throughout this period, super-prime transactions recorded a drop of 16.5% year-on-year to stand at a total of 227. These declines witnessed in both markets have been largely underpinned by significant declines in off-plan sales largely attributable to the high levels of demand for off-plan properties and the limited level of upcoming supply. In terms of performance, in the first quarter of 2024, average prime prices registered a year-on-year increase of 16.0%, standing at an average of AED 4,661 per square foot, and average super-prime prices grew by 14.8% over this period, reaching AED 4,978 per square foot.

Taimur Khan, CBRE’s Head of Research MENA in Dubai

Future Projections 

Looking ahead, CBRE expects Dubai’s residential sales market to maintain its upward trajectory. Prices in both the apartment and villa segments of the market will continue to grow, however, not at the same pace. On the rental front, we forecast that residential rents will continue to increase. That being said, the rate of growth will likely moderate.

Taimur Khan, CBRE’s Head of Research MENA in Dubai, comments: “The UAE’s residential market started the year on a relatively strong note, where the elevated demand levels continue to drive performance. The strong levels of activity and high absorption levels, which have reduced available supply, will continue to support price growth in both Abu Dhabi and Dubai over the remainder of the year. In terms of rental growth, we expect that rental rates in Abu Dhabi will continue to rise, with prime areas set to outperform the market. In Dubai, residential rents will continue to increase; however, not at the same rate that we have been seeing to date, and we expect that the rate of change will diminish in the second half of the year.”

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