Despite the uncertainty caused by the onset of a number of Covid-19 variants, the UAE’s property market has seen a marked upturn in performance in 2021, according to leading real estate advisory firm CBRE.  

 

Looking ahead, with a plethora of regulatory changes and government initiatives, CBRE expects to see continued strengthening in activity and performance levels across all real estate segments in 2022.

 

Looking at the UAE’s office sector figures, vacancy in office prime stock continues to be limited in Abu Dhabi and as a result, average prime rental rates in the year to Q4 2021 have edged up by 1.5%, said the top industry expert. 

 

In grade Grade A and Grade B buildings, rents have softened by 1.5% and 2.4% respectively over the same period. In Dubai, average market rents for offices have continued to soften in the year to Q4 2021, with Prime, Grade A, Grade B and Grade C rents falling by 6.2%, 0.1%, 4.4% and 6.8% respectively, it stated. 

 

Over the final quarter of 2021, we have seen a number of new market entrants acquire space in Dubai’s office market and some existing occupiers also increased their quantum of space occupied.

 

However, the majority of activity in the market continues to stem from incumbents consolidating space, with most looking to improve the quality of space that they occupy. In 2022, we thus forecast that market performance in the Prime and Grade A segments will continue to improve.

 

In the residential sector, average prices in Abu Dhabi increased by 1.6% in 2021, with average apartment prices rising by 1.6% to reach AED10,885 per square metre and average villa prices increasing by 1.5% to reach AED8,789 per sq m. 

 

Rents in the residential market fell by 1.4% in the 12-months to December 2021. In 2021, a total of 5,435 new units were delivered with 59% of this new stock being delivered in Al Raha Beach and Yas Island.

 

In 2022, 9,695 are scheduled to be delivered, with 72.1% of upcoming stock being located in Al Raha Beach, Al Maryah Island and Reem Island. Average prices in Dubai increased by 9.3% in the year to December 2021, the highest growth rate since January 2015. 

 

Over this period, average apartment prices increased by 7.5% and average villa prices increased by 21.2%, with average apartment prices standing at AED 1,072 per square foot and average villa prices at AED1,228 per sq ft. 

 

Since October 2021, average rental rates have recorded annual growth for the first time since June 2015. In the year to December 2021, average rents increased by 8.3%, with average apartment and villa rents increasing by 6.3% and 21.7% respectively over this period. The growth rate in villa rents continues to be at historic highs. 

 

In 2021, a total of 37,403 new units were delivered, with new stock in Jumeirah Village Circle, Business Bay and Damac Hills accounting for almost a third of the total. In 2022, 68,138 additional units are scheduled to be delivered, however we expect the actual materialisation to be lower. 

 

In terms of transaction volumes, the total number of residential transactions in Dubai reached 57,043 in 2021, up 73.6% from 2020 and 51.6% from 2019. The 2021 total was also the highest since 2009. 

 

Looking ahead, in 2022, we expect transaction volumes to remain robust over the course of the year. However, with payment plans offerings tightening and mortgage rates likely to edge up, we anticipate the market will face some headwinds in 2022, at least compared to 2021. 

 

Looking at the hospitality sector, the UAE’s Key Performance Indicators (KPIs) have continued to show significant levels of improvement over the course of the year. In 2021, the average occupancy rate increased by 14.5 percentage points year-on-year and the average ADR increased by 26.9%. 

 

As a result, over this period, we have seen the average RevPAR increase by 62.5%. The UAE’s occupancy in 2021 sits 7.1 percentage points below its 2019 level, however, the ADR is 4.3% higher. 

Although average RevPARs are 5.8% below 2019 levels, a number of hotels have optimised costs and increased efficiency in a material manner during the pandemic, thereby providing support to profitability. 

 

Taimur Khan, Head of Research (Mena) at CBRE in Dubai, said: "Underpinned by Expo 2020, the UAE’s less restrictive travel restrictions and the more palatable temperatures, the recovery only began in earnest in the last quarter of 2021. Looking forward, I believe that performance in the UAE’s hospitality market is likely to remain fairly steadfast for the first third of the year."

 

"After this, with restrictions in Europe likely to ease, occupancy rates and ADRs should see a material softening," he added.