The UAE Real Estate

Market overview
Research | Q2 2023

jll-mena.com
Office Residential
Dubai Dubai
16% 24%
Y-o-Y
9.1m 99k 700k 21k Y-o-Y Y-o-Y

sq m GLA sq m GLA 18% units units

Average Average
Total stock 2023 planned Average Total stock 2023 planned sale prices rental rates
deliveries Grade A CBD rents deliveries May 2023 May 2023
Source: REIDIN

Abu Dhabi Abu Dhabi

1% 1%
Y-o-Y
3.9m 41k 283k 3k Y-o-Y Y-o-Y

sq m GLA sq m GLA 11% units units

Average Average
Total stock 2023 planned Average Total stock 2023 planned sale prices rental rates
deliveries Grade A rents deliveries

During the second quarter, there were no office projects
completed in either Dubai or Abu Dhabi, keeping the total
supply stable at 9.1 million sq. m. in Dubai and 3.9 million sq.
m. in the capital. Over the remaining half of 2023, around 99,000
sq. m. of office gross leasable area (GLA) is expected to enter
Dubai and 41,000 sq. m. in Abu Dhabi.
Dubai’s office market continued to record strong demand,
with a diverse mix of tenants from all segments. Due to the
low availability of good-quality office space and the healthy
inflow of new market entrants, co-working and serviced
offices have acted as an initial landing pad for majority of new
entrants while they explored long-term options. Consequently,
average Grade A rents within the Central Business District (CBD)
increased by 18% year-on-year (Y-o-Y) to AED 2,300 per sq. m.
per annum in the second quarter. For the same period, office
vacancy within the CBD was recorded at 10%.
Similarly, in Abu Dhabi, the number of office inquires, and the
amount of space being sought have both increased over the
past quarter, primarily driven by the defense, technology, and
financial industries. Demand for Grade A space continued to
increase due to limited availability. As a result, average city-
wide Grade A rents rose by 11% Y-o-Y to AED 1,900 per sq. m.
per annum in Q2. Additionally, the demand for co-working and
serviced offices also stayed strong as corporates continued to
follow hybrid working models.
Occupiers are being compelled to change their strategy while
finding new space, due to rising rents and limited availability
in prime locations. While some opted to reassess their
requirements and settle for what was available in the market,
others had to expand their search to secondary locations offering
Grade B/B+ spaces. Occupiers with more stringent requirements
are having to explore built-to-suit opportunities to fit their needs.
The delivery of 7,300 units in Dubai during the second quarter
raised the total residential stock to 700,000 units. In the
remaining half of this year, an additional 21,000 units are
scheduled to be handed over. In Abu Dhabi, about 1,000 units
were added during the quarter, bringing the total residential
stock to 283,000 units. In terms of future supply, close to 3,000
units are in the pipeline for this year, comprising mainly of
apartments within master planned communities such as Al
Raha Beach, Al Maryah Island and Al Reem Island.
Several developers reported robust absorption of newly
launched projects in Dubai. Indeed, according to the data
from Dubai Pulse, off-plan residential sales increased by 38%
in value and 30% in volume during Q2 when compared to the
same period last year. Majority (57%) of the transactions in the
off-plan category were recorded between AED 500,000 and AED
2 million, with investors primarily focused on studios and 1BR
units in areas like JVC, Dubailand and MBR City.
Similarly, in Abu Dhabi, the off-plan market continued its strong
performance over the quarter. Data from Quanta showed that
off plan transactions value more than doubled from AED 1.8
billion in Q2 2022 to AED 3.8 billion in Q2 2023. Activity was
largely concentrated between the AED 2 and 3 million range,
driven by villa transactions on Al Reem Island and Yas Island.
Residential market performance continued to surge in Dubai,
with a 16% uptick in sale prices and 24% in rentals in May 2023
when compared to the same period last year. Demand for
high quality luxury products persisted in established mixed-
use communities. In the capital, sale prices and rentals were
marginally up by 1% each as outdated stock on the main island
continued to face pressure from newer high-end communities.
This trend is likely to persist as the emirate continues to draw
demand towards upcoming new islands.
Retail Hospitality
Dubai Dubai YT June 2023

Occupancy 78%
Rate

Y-o-Y
4.7m 83k 151k 6k ADR’s USD188
sq m GLA sq m GLA -2% keys keys

RevPar’s
Total stock 2023 planned Average rental rates across Total stock 2023 planned USD146
deliveries primary and secondary deliveries
malls Source: STR Global

YT June 2023
Abu Dhabi Abu Dhabi
Occupancy 71%
Rate

Y-o-Y
3.1m 58k 32.5k 200 ADR’s USD137
sq m GLA sq m GLA 0% keys keys

RevPar’s
Total stock 2023 planned Average rental rates across Total stock 2023 planned USD97
deliveries primary and secondary deliveries
malls Source: STR Global

Around 6,000 sq. m. of retail space was added in Dubai during
the second quarter, increasing the stock to 4.7 million sq. m.
In the remaining months of this year, around 83,000 sq. m. of
retail GLA is scheduled to be delivered across the emirate, the
majority of which is in the form of expansion of a super regional
mall and new neighbourhood malls. In Abu Dhabi, about 2,000
sq. m. of retail space was completed, which raised the total
stock to 3.1 million sq. m. Another 58,000 sq. m. is anticipated
to be completed in the second half of this year.
Well-located retail developments have been benefitting
from the increasing number of tourists in Dubai. Prime
retail developments were operating at near full occupancy.
In contrast, community malls and retail developments in
secondary locations noted a marginal drop in activity, as
footfall remained dominant in larger regional and super-
regional malls. As a result, average rental values across
primary and secondary malls were down by 2% in Q2
when compared to the same period last year.
In Abu Dhabi, broadly, the retail market maintained stable
rental performance over the second quarter when compared
to the same period last year. That said, certain landlords,
particularly those of old developments, faced pressure due
to increased competition from new retail developments. In
contrast to Dubai, landlords were more flexible and offered
incentives such as providing capex support, honeymoon trade
periods, revenue share-based deals, and extended fit-out
periods for established international brands.
F&B remained one of the strongest sectors to drive footfall
in retail developments. In order to enhance the customer
experience and introduce new concepts to the market, mall
owners have been exploring plans to upgrade their offerings
through either upgrading traditional food courts or adding new
modern food halls. One such example is the upcoming “Market
Island” in Dubai Festival City. These new food halls are generally
designed to attract upper-scale F&B brands.
In the second quarter, around 1,000 keys were added in Dubai,
increasing the total supply to 151,000 keys. During the same
period, no notable hotel projects were completed in the
capital, keeping the total stock stable at 32,500 keys. In the
remaining six months of this year, another 6,000 and 200 keys
are scheduled to be handed over in the former and the latter
city, respectively.
After an exceptional last year, Dubai’s hotel market started to
show signs of stabilising in Q2 2023. Applying effective revenue
management strategies, operators opted to maintain higher
occupancies at the expense of average daily rates (ADR).
Indeed, for the period of January through June, ADR
decreased by 6% to reach USD 188 when compared to the
same period last year. In contrast, occupancy level increased
to 78% for YT June. This decline is by no means a precursor to
a slow down but rather a healthy indicator of the market
finding its balance.
In Abu Dhabi, the hotel market continued to perform strongly. The
emirate aims to achieve a total of 24 million visitors by the end of
2023, and the growth in both domestic and international visitors can
be credited to greater awareness of Abu Dhabi as a destination and
the availability of a wider selection of year-round entertainment,
sporting events, trade events, and roadshows. For YT June, the
capital recorded a 26% increase in ADR to reach USD 137 when
compared to the same period last year. For the same period, city-
wide occupancy increased to 71%. This resulted in a 28% increase
in revenue per available room (RevPar), which stood at USD 97.
With several modern tech enabled hotels operating in the market,
older legacy hotels need to undergo renovations to enhance
their competitiveness. These refurbishments typically focus on
technological upgrades, sustainability measures and innovative
design enhancements. This move aims to align traditional hotels
with contemporary industry standards and cater to evolving
customer experience.
Definitions and methodology

Future Supply Retail

JLL estimates of future supply is updated on a quarterly basis and is based on primary research (physical Supply
inspections) and secondary research (discussions with developers). The future supply is reflective of projects The classification of retail centers is based on the Urban Land Institute (ULI) definition and based on their
actively under construction. It excludes projects that have been announced, where ground works have not Gross Leasable Area (GLA):
started. We remain cautious of the ability of some projects to meet their stated completion deadlines, with
significant delays in project delivery leading to a low materialization rate. Super Regional Malls have a GLA of above 90,000 sq m
Regional Malls have a GLA of 30,000 - 90,000 sq m
Office Community Malls have a GLA of 10,000 - 30,000 sq m
Supply Neighborhood Malls have a GLA of 3,000 - 10,000 sq m
The current supply of completed office GLA is based on a comprehensive list of office buildings that have been Convenience Malls have a GLA of less than 3,000 sq m
handed over for immediate occupation. This includes standalone office buildings and office space within mixed-use
buildings. Our project list excludes government owned and wholly occupied buildings. The current supply of completed retail GLA is based on a comprehensive list of mall-based retail that have been
handed over for immediate occupation. Our project list excludes street retail and retail within mixed-use buildings.
Performance
The weighted average rent (WAR) is based on estimates from the JLL Offices and Business Space team. It reflects Performance
the WAR across a basket of Grade A buildings in the CBD which includes the DIFC. Average rents are based on estimates from the JLL Retail team. It reflects the rents across a basket of primary and
Grade A buildings are defined as high quality office spaces, well located, with good access to infrastructure (metro) secondary retail centers.
and amenities including F& B and retail. Primary and secondary retail centers are identified based on their turnover levels. Primary Malls are the best
The WAR of Grade A buildings represents the top open-market, net rent (exclusive of service charge and incentives) performing malls with highest levels of turnover. Secondary Malls are the average performing malls with lower
for a new lease that could be expected for a notional office unit. levels of turnover.
Average rents represent the top open market net rent expected for a standard in line unit shop of 100 sq m in a
basket of regional and super regional centers. Given the variation in rentals, we quote percentage change for retail
rents rather than actual figures.

Residential
Supply
The current supply of completed residential buildings is based on quarterly surveys of the entire Abu Dhabi and
Dubai metropolitan areas. It is reflecting residential units that have been handed over for immediate occupation.
Our project list excludes labor accommodation and local Emirati housing. Our definition of residential units
includes apartments, villas, and townhouses.
Hotels
Supply
The current supply of hotel rooms is based on data from our quarterly surveys, reflecting hotel rooms that have been
handed over for immediate occupation. Our project list includes all graded supply and includes serviced apartments.

Performance
Data on residential performance in Dubai is based on the REIDIN monthly index. The REIDIN Residential Property
Price Indices (RPPIs) uses a monthly sample of offered/asked listing price and rental data and transaction data.
Data on residential performance in Abu Dhabi is based on a basket of buildings.
Performance
STR performance data is based on a monthly survey conducted by STR Global on a sample of international
standard midscale and upscale hotels. Average Daily Rates (ADR) and Revenue Per Available Room (Rev Par)
are the key performance metrics.
Dubai Abu Dhabi

Unit 1, Level 13, Abu Dhabi Trade Centre Building

ICD Brookfield Place Office No. 3, Tourist Club Area
Dubai International Financial Centre (DIFC) PO Box 36788 Abu Dhabi, UAE
PO Box 214029, Dubai, UAE

Tel: +971 4 426 6999 Tel: +971 2 443 7772

Fax: +971 4 365 3260 Fax: +971 2 443 7762

With other MEA offices in:

Riyadh, Jeddah, Al Khobar, Cairo, Casablanca, Johannesburg and Nairobi.

For questions and enquiries, please contact:

Faraz Ahmed
Associate, Research, MENA
faraz.ahmed@jll.com

Muhammad Aijaz Sara Alameddine

Manager, Research, MENA Manager, MENA
muhammad.aijaz@jll.com sara.alameddine@jll.com

www.jll-mena.com

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