Dubai Residential and Office Market

The report indicates that in Q2 2024, the pace of new supply delivery decelerated compared to Q1 2024, with approximately 6,750 residential units completed. Project launches, however, continued at a robust pace, encompassing a wide array of developments from single low-rise buildings and skyscrapers to expansive master-planned communities. Looking ahead, Asteco anticipates the delivery of an additional 25,000 residential units in the second half of 2024, though some may be delayed until 2025.

While apartment and villa rental rates recorded quarterly increases of 3% and 2%, respectively, annual rental growth moderated to single digits, with apartments seeing an 8% increase and villas 4%. This uptick is primarily attributed to the revised RERA rental index, which permits landlords to implement larger rent increases upon lease renewal.

The office rental market continued to thrive, particularly for Grade A space, driven by robust demand and limited supply. The upward pressure on rents is expected to persist until new supply enters the market or business conditions change.

The sales market in Dubai remained strong, driven by ongoing project launches that boost off-plan transactions. While Q2 2024 recorded a steady 2% growth in average sales prices, several areas, including Jumeirah Village and Business Bay, experienced above-average sales price growth. This is attributed to a general increase in demand and in part to a significant rise in both off-plan launches and newly completed developments. These new projects often feature superior quality compared to earlier ones in these areas and are priced accordingly. The off-plan property market continued to maintain remarkable momentum, with both local and international investors eagerly acquiring newly launched units, attracted by the promise of strong returns on investment in a tax-friendly environment.

Additionally, some lenders started offering enhanced financing options for off-plan properties, allowing buyers to secure up to 10% more funding during construction. This additional funding is typically available for projects with at least 50% construction progress, ensuring a degree of risk mitigation for the lender. This move not only stimulates the off-plan market but also broadens accessibility to potential buyers.