UAE Real Estate Market: A Look Back at 2023 and Ahead to 2024
The UAE real estate market has seen a remarkable recovery and growth since the pandemic hit four years ago. Fueled by strong economic growth and effective government strategies, the country has once again become a global magnet for investments, businesses, and people.
In Dubai, the real estate landscape has been particularly strong, with record sales, increased capital growth, surging rents, and attractive yields. Residential sales of ready homes in Dubai increased by 27 percent in 2023, following a robust 31 percent annual growth in 2022. Despite expectations of a decline in mortgage activity due to rising interest rates, mortgage transaction volume actually increased by 25 percent annually.
Villa communities in Dubai have seen property values double since the pandemic, with most exceeding price peaks witnessed 10 years ago. The ValuStrat Price Index (VPI) shows that villa capital values increased by 25 percent annually, with some communities seeing growth rates between 62 percent and 128 percent since 2020.
In the apartment market, capital values have grown in double digits, with the VPI showing a record annual increase of 15 percent by the end of 2023. Apartment rents also rose by 16 percent annually for new contracts.
In Abu Dhabi, the real estate market has seen positive trends at a different pace than Dubai. Sales of ready homes increased by 24 percent annually, while off-plan sales jumped 85 percent in 2023 compared to the previous year. Rent increases in Abu Dhabi were 6.4 percent annually, with apartment rents rising by 5.5 percent and villa rents by 7.3 percent.
Looking ahead to 2024, Dubai’s real estate market is expected to remain strong, with slower growth rates than in the previous year. The apartment market is predicted to surge, while growth in the villa market may be more tempered. Abu Dhabi can expect modest price increases in freehold villa communities and stable apartment prices, with the potential for a boost in mortgage transactions and reduced off-plan sales due to lower interest rates.
Overall, the UAE real estate market has shown resilience and growth, with different dynamics in Dubai and Abu Dhabi setting the stage for continued positive momentum in the coming year.
