ValuStrat, the leading real estate valuation and advisory company, recently shared its Q1 2023 market analysis, reflecting a robust recovery in Dubai and Abu Dhabi's property markets.
The ValuStrat Price Index (VPI), covering Dubai's residential market, surged 11.4% year on year (YoY) to achieve 88 points. Particularly impressive was the growth in Dubai villas, which make up just 13% of the residential market in Dubai. Their annual capital gains reached a remarkable 17.1%, while apartment prices witnessed a 6.6% YoY increase.
"… Interestingly, prime villa prices surpassed the price peaks of 2014 by 1.2%. The valuation-based price index for luxury villas grew 16.8% YoY and 3.2% QoQ to achieve 119.8 points. However, prime apartments lagged behind their villa counterparts, with annual capital gains of 10.2% and quarterly growth of 1.7% to reach 82.9 index points…" said Haider Tuaima, Director & Head of Real Estate Research at ValuStrat.
Dubai residential asking rents for new contracts jumped a staggering 33% compared to the same period last year and 4.1% since the previous quarter. Villas led the increase in new rents, up 51.5% annually and 4.2% quarterly, to achieve an average asking rent of AED 380,500 per annum, the highest in 10 years.
The commercial market in Dubai also demonstrated a strong rebound, with office capital values accelerating by 19.4% annually and a quarterly increase of 6.1%. In addition, median office rents for this quarter recovered by 41.8% compared to the lows experienced during the pandemic.
The Average Daily Rate (ADR) of hotel rooms in Dubai stood at AED 609, a slight dip of 2% YoY. However, Revenue per Available Room (RevPAR) rose 6% YoY to AED 514. Both these figures now surpass prepandemic levels, indicating the resilience of the hospitality sector.
The industrial logistics sector is also part of this growth story. ValuStrat's Price Index registered an annual increase of 11.3% for logistical warehouses in Dubai.
Moving to the Abu Dhabi market, residential capital values have seen steady growth over the last nine months. Abu Dhabi Villa prices experienced accelerated quarterly growth of 1.4%, while apartment price performance lagged slightly behind with a gain of 1% QoQ.
Abu Dhabi's residential rental market also enjoyed positive momentum, with annual rents increasing by 3.2%. However, despite a modest QoQ increase of 1.3%, average apartment asking rents in Abu Dhabi City were 1.5% below the same period last year.
In the commercial realm, the Abu Dhabi office asking rents in the city's primary commercial districts saw a solid quarterly increase of 22.4%.
The hospitality sector in Abu Dhabi echoed Dubai's strong performance. The Average Room Rate (ARR) of hotel rooms in Abu Dhabi was AED 471, and Revenue Per Available Room (RevPAR) reached AED 360, reflecting YoY increases of 34% and 30%, respectively.
Finally, asking prices for industrial properties in Abu Dhabi have risen since Q4 2022, indicating a generally positive trend across the Emirate's real estate market.
"Current strength across almost all asset classes in the UAE real estate market is reflective of robust economic fundamentals, population growth and investor confidence at this time. The Dubai residential property market has been particularly strong post-Covid, with recent evidence of growing transaction levels in affordable areas indicating a possible broadening of momentum as buyers seek out better value.
Commercial real estate gains, in both sales and rental rates, are a testament to the success that many business sectors are currently seeing in Dubai. Off-plan residential launches continue to sell out in Abu Dhabi, as master developers deliver well-priced quality products without any oversupply concerns…" said Declan King MRICS, Managing Director & Group Head of Real Estate at ValuStrat.
For more information on ValuStrat's real estate market analysis Q1 2023 analysis, please visit https://valustrat.com/collections/research.
For a detailed perspective on the property market, visit: Dubai - Real Estate Review Q1 2023
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