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UAE Office Real Estate: Moderate Trends

UAE Office Real Estate: Moderate Trends

According to Google's mobility data, visitation to businesses in the United Arab Emirates has surpassed pre-pandemic levels, with Abu Dhabi's visitation count increasing by 25.3% above pre-pandemic levels and Dubai's visitation count at 28.9% above pre-pandemic levels.

Although the shift in the workweek in the UAE may have skewed this data, after accounting for it, visitation to places of employment in Abu Dhabi (UAE) is up 4.1%, while in Dubai it has decreased by 5.6 percent in the 1st quarter of 2022. Employers in the private sector turning to flexible work arrangements is one major factor putting pressure on the number of visitors.

Rentals and New Construction

The very first quarter of 2022 saw the delivery of almost 6,500 sqm of commercial space in Dubai, increasing the total commercial supply reaching 9.1 million sqm2. 10,835 new lease agreements and 9,678 renewals of existing leases were signed in Dubai at that time, representing an increase of 42.9percentage points and 11.6%, respectively, over the same time frame in the previous year. In Dubai, 90,000 square metres of office space will be supplied in 2022, while Abu Dhabi will receive 124,000 square metres.

Due to the limited supply and availability of premier office space, grade-A offices are predicted to do well in the 2nd half of 2022, with rising rents and occupancy rates.

A substantial number of private sector companies have turned to flexi-work alternatives, which could put downward stress on the conventional real estate office space. As a result, there hasn't been much activity in the private sector in the commercial real estate market.

Real Estate in the UAE for Residential Apartments: Cautionary Hope

Residential capital prices for apartments have grown 8.4% year over year in Q1 2022. Despite having significant growth, it is lower than villas, whose capital values had grown by 34.1% year over year.

Larger properties have been in strong demand recently, which suggests that huge apartments are just as in demand as villas.

New Buildings and Rentals

Average apartment rents rose 11.7% year over year in Dubai and 1.1percent in Abu Dhabi in the first quarter of 2022.

7,659 high rise apartments are anticipated to be built in Abu Dhabi by 2022. 170 apartments at Al Raha Beach were delivered in the first quarter of 2022.

There will likely be 44,708 new residences in Dubai this year, according to estimates. 5,745 apartments were expected to be finished in total as of Q1 2022.

Prices may continue to rise less than those for villas because more prospective residential real estate units will be apartments.

Increased mortgage financing costs brought on by increased interest rates may reduce demand, but if the economy continues to grow strongly, the negative effects may be limited impact.

Date: 2022-09-20