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Dubai realty on track to deliver 34,000 units in 2024

Sector has established itself as a firm pillar of the UAE’s diversification agenda

Published: Tue 19 Mar 2024, 7:25 PM

By
Issac John

Dubai's real estate sector is expected to maintain the upward momentum, building on the strong growth and high levels of buyer demand experienced in 2023. — File photo

The UAE’s real estate sector is expected to continue its upward trajectory in 2024 despite a softening global outlook, with Dubai and Abu Dhabi on track to deliver approximately 34,000 units and 8,000 units respectively, according to experts at a panel discussion.

Robust economic fundamentals, government initiatives, and increased investor confidence are driving new opportunities for sustained growth across asset classes in the UAE’s rapidly evolving market, especially in the short and medium term, panellists said at JLL’s “Navigating the growth spectrum: Exploring Strategies for sustained success” event.

The real estate sector, in particular, is expected to maintain the upward momentum, building on the strong growth and high levels of buyer demand experienced in 2023, they said.

James Allan, CEO, Middle East and Africa (MEA), JLL, said a robust and resilient real estate industry has established itself as a firm pillar of the UAE’s diversification agenda and is expected to deliver a strong performance in 2024 even under inflationary pressures.

“The positive outlook for growth and upward trends in the investment climate offer stability in a time of global uncertainty, reinforcing the UAE’s position as an attractive choice for regional and international real estate investors.”

At the panel discussion, the stalwarts estimated that despite the annual increases in both value and volume of transactions in the residential segment, the pace of increase is likely to slow down in the year ahead.

Even as luxury remains a niche segment, branded residences, wellness, and lifestyle-oriented real estate projects enjoy solid growth alongside co-living spaces that deliver affordable, convenient, and inclusive living solutions for young and single professionals, they argued.

“Despite escalating land prices and construction costs, the positive momentum of the UAE’s residential market is expected to continue in 2024 with Dubai and Abu Dhabi anticipated to deliver approximately 34,000 units and 8,000 units respectively,” they said.

According to Property Monitor, a leading real estate technology and market intelligence provider, Dubai’s buoyant residential market is poised to witness the handing over of more than 40,000 units in 2024 on the back of close to 100,000 new units launched in 2023. The housing sector, which posted the largest annual price increase of 16.4 per cent in over a decade last year, will continue to add to the robust pipeline of supply that will be delivered in the years ahead, Property Monitor said in a report recently.

Speakers said at JLL panel event that with the rise of private and sovereign wealth as well as increased infrastructural spending, there is brighter prospects for the real estate sector in the wider GCC, a region less sensitive to the global challenges of inflation and hikes in interest rates.

“The positive sentiment and performance of various macroeconomic indicators reflect trust and resilience both in the UAE and GCC markets, even as Dubai continues its run as a dominant force in the region’s property sector,” said the JLL experts.

The UAE’s position as a financial and business hub has strengthened demand across the major asset classes and global institutions are actively eyeing investment opportunities in the country, they noted. “Buoyed by its high desirability index, residential, hospitality, and office remain the top-performing segments in the UAE. Commercial real estate represents a competitive landscape with supply-demand gaps for high-quality spaces. Core asset classes continue to generate interest in the UAE’s capital market and the aggressive pricing strategy pursued by asset managers witnessing prime office and hospitality yields about to break the 7.0 per cent threshold.”

According to them, an increased focus on sustainability and tech innovations are further reshaping the real estate landscape where green building practices and energy-efficient designs are gaining prominence and becoming a must-have. Financial institutions too have expanded their competitive lending offerings for green projects.

Dubai has experienced an uptick in luxury off-plan property launches. The residential segment most in demand is below Dh3 million, expanding the scope of opportunities for developers to meet the growing desire for affordable housing options.

In the office market, strong demand for office space was observed in both cities. The market remained firmly in favour of landlords, as rents continued to increase due to the limited availability of quality space and rising inquiries from occupiers. Despite a growing preference for quality over quantity, Grade A offices were limited in supply while changing work patterns and remote working opportunities led to a surge in demand for flex offices.

Speakers noted that strong demand for high-quality logistics and warehousing solutions is stimulating the industrial sector where the UAE holds a leadership position in GCC and is ranked 7th globally on the Logistics Performance Index. Government-led initiatives such as Operation 300 billion, UAE Industrial Strategy 2030, and Made in the UAE, for instance, are expanding the scope for manufacturing and logistics with 3PLs and e-commerce estimated to drive growth.