In the year leading up to March 2023, average apartment rents in Abu Dhabi witnessed a marginal decrease of 0.7%, while villa prices saw a modest growth of 1.1%, according to CBRE’s UAE Real Estate Market Review for Q1 2023.
The report highlights that both apartment and villa sales prices increased over the year, with apartments experiencing a 1.4% growth and villas registering a 1.6% increase.
While Dubai has dominated recent real estate headlines with significant price increases, Taimur Khan, Head of Research, MENA, at CBRE, noted that the overall UAE real estate sector maintained strong demand levels throughout Q1 2023. Khan expects a moderation in growth rates moving forward but anticipates the market to continue its positive trajectory throughout the year.
The report suggests that a shortage of supply, particularly in the industrial, office, and prime retail sectors, may cause a slowdown. It also highlights that only 272 residential units were delivered in Abu Dhabi during the year, concentrated in Al Raha Beach and Shams Abu Dhabi. However, CBRE forecasts the completion of 7,306 units throughout the remainder of 2023, with 52.2% of them located in Yas Island, Al Sowwah, and Al Maryah Island.
In Abu Dhabi’s office sector, CBRE’s data reveals that the average occupancy rate in institutional-grade buildings increased to 92.8% in Q1 2023 from 81.5% a year earlier. Prime, Grade A, and Grade B asking rents also experienced growth of 19.1%, 8.8%, and 10.7%, respectively.
The report raises concerns about the scarcity of new developments in the capital, particularly since the limited new supply is increasingly being pre-leased. This situation becomes more significant as government-related entities occupy a majority of the space, potentially crowding out the private sector.
In Dubai, office occupancy levels have also risen, accompanied by increases in average asking rents for Prime, Grade A, Grade B, and Grade C properties—20.2%, 13.5%, 18.7%, and 28.7%, respectively.
CBRE’s data reveals that as of Q1 2023, average rents across several segments in Dubai have surpassed the levels recorded in early 2019.