UAE Residential Report, Q1 2021

RESIDENTIAL TRANSACTIONS SAW
STRONG FIRST QUARTER GROWTH

The UAE’s residential sector enjoyed a robust opening quarter, with economic improvements, legislative reforms and a successful vaccine roll-out buoying market sentiment and driving transactions.

Villas across Dubai and Abu Dhabi saw increased demand, with average prices rising by 3.9% and 2.2%, respectively, quarter on- quarter (q-o-q). Villa prices across both emirates surpassed their Q1 2020 averages, up by 1.1% in Dubai and 0.5% in Abu Dhabi year-on-year (y-o-y). Villa rents also fared well over Q1, with continued tenant demand for larger accommodation and outside space supporting uplifts across both emirates.

Apartment values were broadly stable, with prices rising by 0.1% in Dubai and 0.2% in Abu Dhabi, q-o-q. The overall average, however, belies the varied performance between more established residential areas and secondary locations. Annually, Dubai and Abu Dhabi apartment prices were down 7.2% and 2.5%, respectively. Apartment rents across both emirates recorded modest Q1 declines, with continued unit handovers, along with changing tenant preferences, placing downward pressure on rates.

Q1 witnessed several key policy announcements, including citizenship reforms and the introduction of a new remote-working visa. Emirati citizenship was opened to skilled foreign nationals, at the invitation of UAE authorities, with the remote-working visa offering one-year residency, subject to qualifying criteria. These reforms build on recent enhancements to the UAE’s retirement and investment visa programmes, and will likely serve to bolster residential demand moving forwards.

While upcoming supply may challenge apartment sector performance over 2021, we expect demand for villas to continue over the months ahead, with renewed international buyer interest, along with sustained tenant demand, set to underpin both sales price and rents medium-term.