Asteco Q4 2021 Real Estate Report Shows UAE Market Optimism

2021 trends weren’t exclusively driven by the pandemic. EXPO 2020, which kicked off in October 2021, brought relief to both residents and businesses. Other major initiatives announced such as the Golden Visa and Retirement Programs, the release of the Dubai Urban Master Plan 2040 (April 2021), the successful deployment of vaccines and the strategic containment measures put in place by local governments and feds during the year also improved market sentiment.

The report indicates that the current trend of periodic emergence of new strains of COVID-19 should be examined, as well as how they affect the market in terms of value and activity in the short to medium term.

Abu Dhabi Market Outlook

The report states that the Abu Dhabi residential market saw the delivery of approximately 7,300 residential units in 2021, comprising 7,000 apartments and 300 villas. Most of this supply was delivered to Al Raha Beach on Yas Island. Additionally, several new projects were launched in 2021, including Noya Viva, Noya Luma, and Magnolia on Yas Island.

While apartment rental rates were relatively stable at the end of 2021, they saw marginal annual declines of 1% to 4% in Abu Dhabi. The declines were more pronounced in older buildings, where rents were not aligned with market rates.

Villas and townhouses continued to achieve high levels of demand, particularly within the well-developed villa communities located on Saadiyat Island and Yas Island. As a result, average rental prices for villas increased by 4% over the year, even though some developments recorded a surge close to 15%.

The office market was relatively stable in 2021, with the exception of lower quality office buildings where rental rates fell by 3% on average.

The sales market has been strong in 2021, especially regarding villa sales prices, due to the lack of high quality completed villas available for sale on the market. Villa sales recorded an average annual growth of 14%, mainly driven by existing villa developments on Saadiyat Island and Yas Island.

Similarly, apartment sales also showed increased demand, particularly in the last six months of the year, resulting in an average annual increase of 2%.

The year 2022 will see several new project announcements and projects previously put on hold to restart. The improvements in rental rates seen in the last six months of 2021 are expected to continue in 2022 and the villa sales market is expected to remain relatively active. The latest government regulatory reforms regarding business and foreign ownership, visas and the labor market are expected to boost demand for the residential and office asset classes.

Dubai Market Outlook

In 2021, approximately 17,000 residential units have been delivered, comprising 15,000 apartments and 2,000 villas, with communities such as Jumeirah Village Circle and Akoya Oxygen accounting for the bulk of completions. The commercial sector recorded the delivery of approximately 1.5 million square feet of new office space.

As expected, the start of Expo 2020 has pushed up real estate demand and rental rates. Rental prices for apartments and villas increased by 3% and 4% over the quarter and by 10% and 24% per year. Office rental rates have also increased by 4% on average over the past three months, although additional incentives may have influenced net effective rents. Annual variations remained in contraction at 1%.

In the sales sector, the sale prices of apartments, villas and offices continued their upward trajectory, increasing on average by 20%, 40% and 12% compared to 2021. The increase in supply and accessibility has opened the market to a wider pool of investors and has facilitated an increase in the number of end users and first-time buyers.

The report noted a marked increase in inquiries focused on quality properties at competitive rates, particularly in the villa segment.

The outlook for 2022 foresees new supply of nearly 30,000 residential units and 2 million square feet of office space, although as with previous years some of this supply is expected to be delayed and will eventually impact 2023. Delivery in 2022, retaining tenants will become increasingly critical and rental rates across all major asset classes are expected to increase further for good quality properties, albeit at a slower pace. Sales price growth should continue but slow down in 2022, in line with the increase in supply and the launch of new projects.

Al Ain and Northern Emirates Market Outlook

While the other Emirates continued their upward trajectory, particularly in the residential sector, the dynamic of the Northern Emirates was more or less in line with previous years.

Despite the marginal fluctuation of residential rental rates in the Northern Emirates throughout the year, the last quarter recorded growth rates of 2% on average, compared to Q3 2021. However, the annual variations showed a down 1%, with the recovery concentrated towards the end of the year.

Selling prices and rental rates for apartments in Sharjah have remained more or less stable, with quarterly growth of 2%. Rental rates in typical apartment buildings in Ras Al Khaimah and Umm Al Quwain saw no change in 2021. Ajman, Fujairah and Sharjah noted marginal reductions of between 1% and 2%.

With government-led incentives, attractive developer/landlord offers and businesses returning to business, Asteco expects sales prices and rental rates to stabilize and in some cases increase in Sharjah. and in the Northern Emirates.

In the Emirate of Al Ain, no major supplies were delivered in 2021, except for the delivery of several buildings in Town Center and Asharej and a few private villas in Falaj Hazza. Additionally, several residential buildings have been converted into offices, with some being used by healthcare-related businesses.

Although rental rates were relatively stable in the second half of 2021, rental rates for apartments and villas saw an average annual decline of 3% and 2%, respectively.

Demand for office space increased in the second half of the year and as a result rental prices remained stable across the market. While the retail sector saw only marginal declines in rental rates, with the majority of demand coming from the F&B sector, landlords continued to offer incentives including rent-free periods, rental plans payment flexibility and contract renewal discounts, which somewhat offset potentially larger average rent reductions. .

The outlook for 2022 predicts that Sharjah and Ras Al Khaimah will likely see significant additional supply in various planned communities in terms of completed project transfers and planned new project launches. Furthermore, Sharjah is also focusing on boosting tourism in the emirate.

As in 2021, in Al Ain, Asteco does not expect a large number of new properties in 2022. New government reforms regarding visas and labor laws should bring more stability to the market in terms of rental rates and demand for housing and offices. sectors. Landlords will need to continue to offer incentives to retain tenants and facilitate occupancy of vacant units and new supply.

About Asteco:

Asteco is a leading regionally and internationally award-winning, full-service real estate services company that was established in 1985 and has gained enormous respect for consistently delivering high quality, professional, value-added real estate services in a seamless manner. The company is also widely recognized for its involvement in many projects that have defined the landscape and physical infrastructure of the United Arab Emirates.

The world-class company has a distinguished and important combination of local knowledge and international expertise and is renowned for its application of the latest technological tools and innovations, its commitment to transparency, its winning strategies and its people expertise.

Undisputed real estate experts with a regional presence serving its clients, Asteco proudly represents a significant number of the region’s top real estate owners, developers and investors.

Asteco offers a wide range of services and solutions to its customers ranging from sales and rentals, property consultancy and management, homeowners association consultancy and management and clubhouse and style management. life in construction consultancy, retail management, appraisal and consulting as well as franchising services. The company applies innovative solutions and cutting-edge technology to add tangible value to its customers at every stage of the property lifecycle and to continuously improve the customer experience.

© Press release 2022

About Tammy N. McFarlane

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