UAE
The UAE’s real estate sector has witnessed impressive growth in Q4 2024, with Dubai and Abu Dhabi leading the charge in commercial and residential markets. Key findings from CBRE Middle East’s latest report highlight the strength of both cities’ real estate sectors, setting the stage for continued expansion in 2025.
Dubai: Record Highs in Commercial Investment
Dubai’s commercial real estate market has seen a significant uptick in investment and transactional activity. Throughout 2024, the city’s office space market enjoyed a robust performance, driven by high occupancy rates and rising rental values. As of December 2024, occupancy rates reached an average of 94%, up from 92% in 2023, indicating a steady recovery and strong demand.
Office leasing rates have also surged, with a remarkable 20% increase compared to the same period last year. However, this growth comes amid tighter supply in prime office locations, which is putting pressure on large-scale lease deals. As a result, the commercial real estate sector is witnessing more limited transactions, with fewer large office spaces available for rent.
Looking ahead, the trend of high occupancy and escalating rental rates is expected to persist into 2025. This outlook is driven by several factors, including the overall economic recovery, the influx of non-oil sectors contributing to job growth, and limited new office space deliveries.
Abu Dhabi: Economic Growth Fuels Real Estate Demand
Abu Dhabi’s real estate sector also experienced impressive growth, underpinned by the city’s strong economic performance. In Q3 2024, Abu Dhabi’s GDP grew by 4.5%, driven primarily by non-oil sectors, which expanded by 6.6%. This economic boost has translated into increased demand for commercial office spaces, particularly in premium-grade assets.
The demand for office spaces has been mirrored by an increase in new office tower developments, particularly in the northern parts of Abu Dhabi Island. Several Grade B and C office buildings are under construction, aiming to meet the needs of expanding businesses. Additionally, occupancy rates in Abu Dhabi’s office market have continued to rise, reaching over 94% by the end of 2024.
Rental rates have also followed this upward trajectory, rising by approximately 15% compared to the previous year. With landlords becoming more assertive in lease negotiations, the market has become more competitive, reflecting strong demand and a limited supply of high-quality office space.
Future Outlook: Continued Growth for UAE’s Real Estate Sector
Both Dubai and Abu Dhabi are expected to continue their positive momentum in the coming years. The UAE’s diversified economy, supported by non-oil sectors, has created a stable foundation for the real estate market to thrive. As demand for office spaces grows, developers are responding by bringing new projects to the market.
Moreover, the UAE’s position as a global business hub, coupled with a growing population and foreign investments, is fueling ongoing demand for both commercial and residential properties. With tight supply in premium locations, the competition for high-quality spaces is expected to intensify, pushing rental prices higher.
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