DUBAI: Dubai’s office market has seen rental growth for the first time since 2016’s first quarter, according to CBRE’s UAE Real Estate Market Review Q2 2022 report.
Looking at the office sector figures in the second quarter, Dubai-based commercial Ejari contracts increased by 28.1 percent year-on-year, according to the report.
Average Prime and Grade A rents in Abu Dhabi fell by 6.9 percent and 1.1 percent respectively, whereas the Grade B segment of the market saw average rents increase by 4.5 percent.
The UAE’s real estate sector continued to record strong activity and performance in the first half of the year, it said.
Prime, Grade A, Grade B, and Grade C rents increased by 7 percent, 7.2 percent, 3.9 percent, and 3 percent, respectively, in the second quarter.
According to CBRE, the market will continue to outperform Prime and Grade A assets due to the limited availability of quality stock.
There was an increase of 2.2 percent in property prices in Abu Dhabi in the 12 months to June 2022, with an increase of 2.1 percent for apartments and 2.2 percent for villas.
In the year to June 2022, apartment rents in the capital increased by 0.6 percent, while villa rents declined by 2.3 percent. A total of 33.2 percent of sales transactions took place in this period, primarily on Reem Island, Yas Island, and Saadiyat Island.
Dubai’s average property price increased by 10.1 percent in the year to June 2022.
There was an 8.7 percent increase in average apartment prices and a 19.3 percent increase in average villa prices during this period. In the year to June 2022, average apartment and villa rents increased by 21.2 percent and 24.7 percent, respectively, the highest growth rate since July 2014.
Over this period, 39,269 transactions have been recorded, the highest total since 2009. Over the year to June 2022, total transaction volumes were up 54.5 percent, with off-plan and ready transactions up 72.3 percent and 43.3 percent, respectively.
CBRE reported that the UAE’s key performance indicators continued to show significant improvement in 2022.
As of June 2022, the average occupancy rate had increased by 10.3 percentage points year-over-year.
Revenue per available room across the UAE now stands 16.9 percent above 2019 levels on a year-to-date basis through June 2022.
The growth has primarily been driven by Fujairah, Dubai, and Sharjah, where RevPAR has grown by 26.7 percent, 20.6 percent, and 10.5 percent, respectively.
The report said it predicted a steeper decline in performance than usual during the summer. Despite this, the project has not materialized as expected.
According to the report, local and regional events are likely to boost performance for the remainder of the year.
The number of retail visits in Abu Dhabi and Dubai exceeded their respective pre-pandemic baselines by 13 and 12.3 percent, respectively.
A total of 6,540 new retail Ejari contracts were registered in Dubai in the second quarter of 2022, up 1.8 percent from the same period last year, and 10,193 contracts were renewed, up 16.1 percent.
Retail operators in Abu Dhabi are still hesitant to acquire new space due to COVID-19 regulations, and existing occupiers are content to maintain their existing footprints and lock in rents.
The average retail rent in Abu Dhabi remained flat in the year to Q2 2022, while it increased by 22.0 percent in Dubai.