The UAE’s property market is on an upward trajectory, buoyed by strong demand, solid economic growth, and keen foreign interest.

According to JLL MENA’s Q1 2024 UAE Real Estate Market Overview, both Dubai and Abu Dhabi’s residential sectors exhibited significant growth.

In Dubai, sale prices and rentals saw annual increases of around 21%, while Abu Dhabi experienced a 7% rise in sales prices and a 4% increase in rental rates.

Reidin.com reported that Dubai’s all-residential property price index (RPPI) jumped 20.71% y-o-y (16.81% inflation-adjusted) in Q1 2024, continuing a trend from previous years.

Quarterly, Dubai’s residential property prices rose by 6.12% (5.57% inflation-adjusted).

The UAE’s Booming Housing Market

Property Types Breakdown:

• Apartments in Dubai: Prices surged by 20.43% (16.54% inflation-adjusted) annually, and 6.2% (5.66% inflation-adjusted) quarterly.
  
  
• Villas in Dubai: Prices increased by 22.08% (18.14% inflation-adjusted) y-o-y, and 5.35% (4.8% inflation-adjusted) quarterly.

The average purchase price of Dubai apartments was AED1,500,000 (US$408,386) and AED3,200,000 (US$871,222) for villas by end-2023.

Abu Dhabi’s Market:

• The all-residential property price index rose by 7.53% (4.05% inflation-adjusted) y-o-y in Q1 2024, and 2.45% (1.92% inflation-adjusted) quarterly.
  
  
• Apartments: Prices increased by 6.42% (2.98% inflation-adjusted) annually, and 2.37% (1.84% inflation-adjusted) quarterly.
  
  
• Villas: Prices rose by 12.97% (9.32% inflation-adjusted) y-o-y, and 2.81% (2.28% inflation-adjusted) quarterly.
  
  

Demand Surge

In Dubai, registered sales transactions hit a record 133,134 in 2023, up by 38% from the previous year. Abu Dhabi saw a 75% increase in transactions to 13,298 units in 2023.

This strong demand continued into Q1 2024, with Dubai experiencing a 16% growth in transaction value and a 20% increase in volume y-o-y, while Abu Dhabi saw a 1% decline in value but a 17% increase in volume.

Economic and Investment Appeal:

Dubai’s economy is seen as stable with strong financial fundamentals, attracting global investors due to its robust infrastructure and supportive regulations.

The UAE economy grew by 3.1% in 2023, driven by domestic consumption. Projections for 2024 suggest further growth, with the IMF and the UAE central bank forecasting growth rates of 4% and 4.2% respectively.

UAE is one of the richest countries in the world, with a GDP per capita (PPP) of US$92,073 in 2023, based on IMF figures.

Historical Context:

From 2002 to 2008, Dubai’s property prices nearly quadrupled, marking the city as one of the world’s fastest-growing. Following the passage of the long-awaited foreign property ownership law in March 2006, a surge of foreign investment bolstered Dubai’s ambitions.

Massive investments fueled mega-projects such as Jumeirah Garden City (estimated at US$95 billion), Dubailand (US$64 billion), The Lagoons (US$25 billion), Palm Jumeirah (US$14 billion), and The World (US$14 billion).

However, the global credit crunch struck at the end of 2008, causing transaction volumes to plummet. Nearly half of the construction projects in the UAE, worth around AED 1.1 trillion (US$300 billion), were either put on hold or canceled.

As the economy rebounded, many halted construction projects resumed. From January 2012 to the end of 2014, Dubai experienced a housing boom, with prices soaring by an average of 21.5% annually.

By the end of 2014, however, this growth began to slow, and the market has remained depressed since.

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Dubai’s all-residential property price index (RPPI) fell by 11% (-14.1% inflation-adjusted) in 2015, according to DubaiLand.com.

House prices continued to decline, falling by 0.4% (-2.9% inflation-adjusted) in 2016, 3.9% (-5.2% inflation-adjusted) in 2017, 8.6% (-8.2% inflation-adjusted) in 2018, 6% (-4.1% inflation-adjusted) in 2019, and 7.1% (-2.9% inflation-adjusted) in 2020.

Several factors contributed to this prolonged decline, including an excess supply of apartments and regulatory measures such as the Federal Mortgage Cap introduced in 2013, which slowed price rises in Abu Dhabi and Dubai.

The implementation of a 5% value-added tax (VAT) in January 2018 on home sales after three years of project completion and the doubling of property registration fees from 2% to 4% by the Dubai Land Department also dampened demand.

The pandemic further adversely impacted both demand and supply in the housing market.

The market began to recover in 2021, with Dubai house prices rising by 9.25% and Abu Dhabi prices by 1.56%. This positive trend continued into 2022, with Dubai house prices increasing by another 9.53% and Abu Dhabi prices by 1.46%.

Dubai’s Strong Demand

Demand continues to surge in Dubai. In 2023, registered sales transactions hit a record 133,134 deals, marking a 38% increase from the 96,459 deals recorded the previous year, according to Property Finder.

The total value of transactions in Dubai last year reached AED 571.3 billion (US$155.54 billion). This figure includes deals for apartments, villas, commercial properties, and plots, covering both cash and mortgage transactions. It represents a 45.8% year-on-year growth from AED 391.8 billion (US$106.67 billion) in 2022.

In 2023:

• Apartment sales transactions amounted to AED 218 billion (US$59.35 billion), a significant 48.2% increase from the previous year.
  
  
• Villa sales transactions reached AED 65.7 billion (US$17.89 billion), up by 8.2% from the previous year.

According to Afimmo Properties LLC, Dubai Marina recorded the highest transaction volume last year, with total purchases amounting to AED 36.7 billion (US$10 billion).

This was followed by Palm Jumeirah with AED 28.51 billion (US$7.76 billion) in deals, Jebel Ali Industrial First with AED 27.93 billion (US$7.61 billion), and Wadi Al Safa 3 with AED 25.33 billion (US$6.89 billion).

The strong growth has continued into this year. In Q1 2024, Dubai’s residential sales transactions saw a 16% increase in value and a 20% rise in volume compared to the same period last year, according to JLL MENA.

Abu Dhabi’s Robust Demand

In 2023, the number of transactions in Abu Dhabi reached a record high of 13,298 units, marking a substantial 75% increase from 7,957 units in 2022, according to the Department of Municipalities and Transport (DMT).

Additionally, the total transaction value surged by 120% year-on-year to AED 44 billion (US$11.98 billion), up from AED 19.9 billion (US$5.42 billion) in the previous year.

Property demand remains strong in 2024. In Q1, total real estate transactions in Abu Dhabi amounted to AED 15.9 billion (US$4.32 billion), comprising 5,127 sales and mortgage transactions.

Specifically, 2,919 sales and purchase transactions were recorded in Q1 2024, totaling over AED 9.6 billion (US$2.61 billion). Additionally, there were 2,208 mortgage deals, with a combined value of AED 6.3 billion (US$1.72 billion).

Asteco highlighted that “Demand for off-plan developments, particularly high-quality ones, remained high, with significant interest from foreign investors, particularly from Russian and Chinese nationals.”

Asteco further noted, “Notably, Gardenia Bay, launched in September 2023, recorded a remarkable ~15% increase in asking prices between the initial and most recent phases. This underscores the strong demand for premium off-plan residential units and signals a strong appetite for high-quality real estate offerings in the region, particularly from reputable master developers.”

Expat Policies

In 2019, the UAE introduced a new long-term residence visa system, known as the Golden Visa, aimed at attracting foreign investors and professionals.

This visa allows expatriates to live, work, and study in the country without the need for a national sponsor and grants them 100% ownership of their business. These visas are issued for five or ten years and are automatically renewable.

Eligibility for a 10-year visa includes:

• Investors: Individuals with public investments of at least AED 10 million (US$2.72 million).
  
  
• Specialized talents: Professionals such as doctors, scientists, specialists, inventors, and creative individuals in culture and art.
  
  
• Outstanding students: Exceptional students who meet the set criteria.
  
  

Eligibility for a 5-year visa includes:

• Property investors: Individuals who invest in property in the UAE with a minimum gross value of AED 5 million (US$1.36 million). The investment must not be financed through a loan, and the property must be retained for at least three years.
  
  
• Entrepreneurs: Individuals with an existing project with a minimum capital of AED 500,000 (US$136,000).

In June 2021, the UAE launched a new 24×7 residency visa service, enabling applicants to connect with a service team and track the status of their transactions at any time.

By 2022, the UAE government had approved new conditions for obtaining a Golden Visa, reducing the investment amount required and removing restrictions on the duration of stay in other countries.

Additionally, these new rules, which came into force in October 2023, allowed for the purchase of off-plan properties.

Updated Golden Visa Requirements:

• 10-year Golden Visa: Purchase real estate in the UAE for AED 2 million (US$545,000) or buy property for AED 750,000 (US$204,000) for a two-year residence visa.
  
  
• 5-year residence visa: Purchase real estate for AED 2 million (US$545,000) or AED 750,000 (US$204,000) for a three-year residence permit.
  
  

Foreign Homeownership Rules:

The UAE has liberalized foreign ownership laws, particularly in Dubai and Abu Dhabi:

• Dubai: Foreign nationals can buy freehold properties in designated areas.
  
  
• GCC nationals: Allowed freehold ownership anywhere in the Emirates.
  
  
• Abu Dhabi: Foreigners can own property in designated investment zones on a freehold basis. This follows measures to boost the market, including a mandate in 2012 for public sector employees to reside within Abu Dhabi and the removal of a 5% cap on annual rent increases in November 2013.

The real estate market sees significant activity from UAE nationals, followed by investors from India, Saudi Arabia, the UK, and Pakistan.

In 2023, Dubai registered 133,134 sales transactions, a 38% increase from the previous year, with a total transaction value of AED 571.3 billion (US$155.54 billion), up 45.8% year-on-year from AED 391.8 billion (US$106.67 billion) in 2022.

Abu Dhabi also experienced substantial growth, with 13,298 transactions in 2023, a 75% increase from 2022, and total transaction values rising by 120% to AED 44 billion (US$11.98 billion).

Housing Supply

In 2023, Dubai saw the completion of approximately 39,000 new residential units, following 41,000 units in 2022, 44,000 units in 2021, and 40,000 units in 2020.

This information, provided by JLL MENA in its 2023 UAE Real Estate Market Report, indicates that the total housing stock in Dubai reached 719,000 units by the end of 2023. The high number of completions in recent years can be attributed largely to Expo 2020.

In Abu Dhabi, about 5,000 new units were added to the market in 2023, bringing the total housing stock to 284,000 units.

Projections from JLL MENA suggest that around 35,000 units will enter the Dubai market in 2024, while approximately 8,000 units are expected to be completed in Abu Dhabi.

JLL’s Q1 2024 report highlighted that Dubai’s residential market had a strong start to the year, with around 10,000 units completed in the first quarter, increasing the total stock to 729,000 units.

Looking forward, an additional 25,000 units are scheduled for delivery over the remaining nine months, primarily consisting of apartments in key areas like MBR City, Business Bay, Jumeirah Village, and Dubai Land.

In Abu Dhabi, 1,600 units were delivered in the first quarter of 2024, bringing the total stock to 286,000 units. Additionally, another 6,000 units are expected to be added by the end of the year, according to JLL MENA.

Rental Market and Yields

Rental Trends in Dubai:

Dubai’s rental market has seen a significant surge, with rental rates for all residential units up by 20.75% in April 2024 from a year earlier.

Apartment rents increased by 21.79% y-o-y, while villa rents went up by 13.12% y-o-y. This growth is attributed to the robust demand, especially from expatriates attracted by Dubai’s lifestyle and business opportunities.

In Dubai, gross rental yields are good, averaging 7.24% in April 2024, nearly unchanged from a year ago, according to Reidin.com. By property type:

• Apartments: rental yields were 7.66% in April 2024, slightly up from 7.58% a year earlier.
  
  
• Villas: rental yields stood at 5.59%, slightly down from 6.01% in the previous year.

Reidin.com reported a 1% increase in overall rental transactions in Q4 2023 compared to the previous quarter, with renewed contracts showing a significant 9% rise.

This suggests a growing preference for stability among tenants, leading to a 7% y-o-y increase in total rental contracts and a substantial 19% rise in renewed contracts.

Specific Developments:

• DIFC: One-bedroom apartments rented for AED110,000 (US$29,948) annually, and three-bedroom apartments for AED220,000 (US$59,897).
  
  
• Downtown Dubai: Rents for one-bedroom apartments averaged AED115,000 (US$31,310) per annum, while three-bedroom apartments were AED250,000 (US$68,065).
  
  
• Palm Jumeirah: Rents ranged from AED155,000 (US$42,200) per annum for one-bedroom apartments to AED260,000 (US$70,787) for three-bedroom apartments.
  
  
• Sheikh Zayed Road: Annual rents ranged from AED100,000 (US$27,226) to AED157,500 (US$42,881).
  
  

Rental Trends in Abu Dhabi:

Abu Dhabi’s rental market also experienced growth, but at a more moderate pace compared to Dubai. The average rental rate for all residential units increased by 8.49% y-o-y in April 2024.

In Abu Dhabi, gross rental yields were slightly lower than that of Dubai, but remain relatively good at an average of 6.46% in April 2024 – not significantly different from 6.37% a year earlier.

• Villas: rental yields were 5.31% in April 2024, down from 5.7% a year ago.
  
  
• Apartments: gross rental yields stood at an average of 6.82% in April 2024, up from 6.61% in the same period in the prior year.

Apartment rents rose by 9.24% y-o-y, while villa rents increased by 4.84% y-o-y.

High-end properties in Abu Dhabi saw significant rent increases, contributing to an overall market growth of approximately 3% annually.

Specific Developments:

• Central Abu Dhabi: One-bedroom apartments averaged AED60,000 (US$16,336) annually, two-bedroom apartments AED98,000 (US$26,681), and three-bedroom apartments AED128,000 (US$34,849).
  
  
• Corniche: Rents ranged from AED65,000 (US$17,697) for one-bedroom apartments to AED138,000 (US$37,572) for three-bedroom apartments.
  
  
• Al Khalidiya/Al Bateen: Annual rents ranged from AED73,000 (US$19,875) for one-bedroom apartments to AED160,000 (US$43,561) for three-bedroom apartments.
  
  
• Al Raha Beach: Rents ranged from AED75,000 (US$20,420) for one-bedroom apartments to AED175,000 (US$47,645) for three-bedroom apartments.
  
  
• Marina Square: One-bedroom apartments rented for AED63,000 (US$17,152) annually, and three-bedroom apartments for AED135,000 (US$36,755).

A recent study conducted by the Global Property Guide showed that gross rental yields in the UAE averaged 5.16% in Q1 2024, up from 4.93% in Q3 2023. Gross rental yields in Dubai and Abu Dhabi are higher than the national average, at 6.3% and 5.68%, respectively.

Yields in Dubai are good, but the days when Dubai generated stratospheric yields are gone. Also, this can be a volatile market. Home prices swing up and down frequently.

Yields are lower in other emirates and cities. Raz al Khaimah yields averaged 4.69% in Q1 2024; Ajman at 5.23%; and Sharjah at 3.92%.

Regulatory Environment

Dubai

The Real Estate Regulatory Agency (RERA) regulates tenancy laws and landlord-tenant relationships in Dubai. Key regulations include:

• Law No. 26 of 2007: Governs landlord-tenant relationships.
  
  
• Law No. 33 of 2008: Amends certain provisions of Law No. 26.
  
  
• Decree No. 26 of 2013: Establishes the Rent Disputes Settlement Centre.
  
  
• Decree No. 43 of 2013: Governs rent increases, with caps on allowable rent hikes based on the market rate.

In 2024, rent increases in Dubai are as follows:

Landlords can only increase rents at lease renewal, with a 90-day notice required.

Abu Dhabi:

Abu Dhabi maintains a 5% annual rent cap reinstated in 2016. New rules in 2018 make it easier for landlords to evict tenants for non-payment of rent.

The city has also strengthened protections for off-plan buyers, requiring developers to adhere to strict regulations, including maintaining escrow accounts and providing disclosure statements.

Mortgage Market Insights

Despite rising interest rates, Dubai’s mortgage market remains robust, driven by a high proportion of cash buyers.

Mortgage transactions in Dubai reached AED121 billion (US$32.94 billion) through 33,280 real estate deals in 2023. In contrast, Abu Dhabi’s market sees more mortgage transactions compared to cash deals.

Mortgage Rules:

• First Home (Owner-occupier): Nationals can borrow up to 80% for properties under AED5 million (US$1.36 million), and 70% for properties above this value. Expatriates can borrow up to 75% and 65% respectively.
  
  
• Second Home or Investment Property: Nationals can borrow up to 65%, and expatriates up to 60%.
  
  
• Off-plan Purchase: Both nationals and expatriates can borrow up to 50%.

LTV ratios were increased by 5% for first-time homebuyers in March 2020 to alleviate economic pressures from the pandemic.

The key interest rate kept at 5.40%

In May 2024, the Central Bank of the UAE kept its key overnight deposit facility unchanged at 5.40%, following the US Fed’s decision to keep the interest on reserve balances unchanged. The move followed six consecutive rate hikes in the past nineteen months.

The UAE’s base rate for overnight deposits is linked to the US Fed’s interest on excess reserves (IOER).

Mortgage interest rates in Dubai have, in the past, followed key US Fed rates, because the dirham (AED) is pegged to the US dollar at AED3.67 = US$1. Some banks offer mortgage loans to both nationals and expatriates.

However, due to the continuous increase in key interest rates to tame inflation, mortgage owners with variable rates in the emirates have seen their mortgage interest rates surge from 2% to 3% annually to 6% to 9%. Some homeowners are even paying more than 10% mortgage rates.

Crude Oil Prices and Economic Growth

Brent oil prices saw significant volatility, peaking at US$120.08 per barrel in June 2022 due to the Russian invasion of Ukraine, but fell to US$90.05 per barrel by April 2024.

The UAE’s push for higher oil production within OPEC+ has been a contentious issue but has stabilized somewhat with agreements to increase oil supplies gradually.