07/15/2024 30.08.2024 120 0 0 Author Elena Kirichenko
In recent years, the Dubai real estate market has been showing record levels in terms of the number and volume of transactions. Currently, both residential and commercial facilities in the emirate have high investment potential. A number of factors have led to this situation: from a stable political climate, loyal conditions for obtaining a golden visa and population growth to infrastructure development and rental yields, which can exceed 9% per annum.
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Market development in 2023
Summing up the results of 2023 allowed us to talk about impressive results. The total value of residential real estate sold amounted to 314.55 billion AED ($85.64 billion). It exceeded the figures for 2022 by 49.7%. A total of 118,011 housing transactions were concluded. A year earlier, the number of sales was 36.4% lower.
On an annual basis, the average cost of 1 m2 increased by:
- 17% for villas under construction;
- 22% for ready-to-move villas;
- 0.6% for apartments in buildings under construction;
- 4.6% for apartments in ready-to-move buildings.
33,700 mortgage transactions were concluded, which is 41% more than in 2022. At the same time, the total amount of loans fell by 7%, amounting to 125 billion AED ($34.03 billion).
Rental income increased by 14.5% year-on-year and reached 35.97 billion AED ($9.79 billion).
The most impressive indicator was the total volume of transactions. Statistics from 2023, collected by the DXB Interact portal, indicate that this figure increased by 56% year-on-year. It reached 412 billion AED ($112.17 billion) and set an absolute record for the Dubai market.
At the beginning of 2024, many analysts agreed that a potential spike in inflation, the unpredictability of bank rates around the world and the outbreak of the Arab-Israeli conflict would lead to a sagging emirate market. However, the first quarter proved the opposite – the real estate sector continued to grow.
The state of the market in 2024
Summarizing the data of the first quarter of 2024, the Dubai Land Department (DLD) found that 36,506 properties were sold during this period. The number of transactions increased by 17.5% compared to the first three months of last year.
The total value of real estate sold increased by 21.9% year-on-year, reaching 108.5 billion AED ($29.54 billion). The primary segment (18,754 sales) slightly surpassed the secondary segment (17,752 sales) in terms of the number of transactions.
8,676 transactions were concluded with the registration of a mortgage loan. This figure increased by 3.2% compared to the first quarter of 2023. The total amount of loans increased by 52% and reached 47.8 billion AED ($13 billion).
The average cost of 1 m2 in the first three months of this year was 16,135 AED ($4,393). The indicator increased by 16.7% compared to the same period in 2023 and became a record of the last decade.
In April, 11,608 properties were sold, which is 45% more than in April last year, but 13.5% less than in March 2024 (13,434 properties were sold in March). The total value of transactions increased by 21.5%, reaching 32 billion AED ($8.71 billion).
7611 transactions were concluded with real estate under construction, they accounted for 68% of the total number of signed contracts. The total volume of such transactions amounted to 16.21 billion AED ($4.41 billion). The remaining 3,584 transactions, with a total value of 8.72 billion AED ($2.37 billion), relate to the ready-made facilities sector. The high demand for off-plan projects is due to the rapid growth of their prices. Real estate purchased at the excavation stage can be resold at the end of construction with a profit of up to 30%.
Zarina Nasimova, Sales Manager at Metropolitan Premium Properties, If you invest in ready-made real estate, its rental yield will at best be from 5 to 10% per annum. A more realistic indicator: from 5 to 8%. But if we are talking about an off-plan project, the capital gain for the year will be 10-15%, depending on the stage of implementation
The mortgage was used 2,180 times, which is 10% less than in April last year. However, the volume of mortgage loans increased by 31.9% to 14.6 billion AED ($3.98 billion).
In comparison with the same period last year, the average price of all types of real estate in April 2024 increased and amounted to:
- 1.3 million AED ($350,000) for apartments (+13.7%);
- 3.4 million AED ($930,000) for villas (+25.8%);
- AED 1.2 million ($330,000) for commercial properties (+39.9%);
- 4.1 million AED ($1.12 million) for land plots (+27.6%).
The average cost of 1 m2 was 16,480 AED ($4,487). It grew by 19.8% year-on-year. This is a record of the last 10 years.
The rent is also going up. In April, the average annual cost of renting apartments reached 74,000 AED ($20,150). It grew by 23.3% from the same period last year. For villas, this figure was 170,000 AED ($46,290). It grew by 21.4%.
According to analysts, by the end of 2024, Dubai developers will hand over 25,000 new properties. Most of them will be built in the areas of Business Bay, Dubiland, MBR City and Jumeirah Village.
Commercial real estate sector
Statistics show that the emirate’s commercial real estate sector has been developing at a slow pace in recent years. However, in the first quarter of 2024, it showed good dynamics. The proof was the increased interest of investors and an increase in the number of leasing transactions.
Despite the slowdown in the global economy as a result of rising inflation and a deteriorating political climate, Dubai continues to use its strategic location in combination with an attractive business environment. This ensures an influx of new investments and foreign specialists. As a result, the volume of leasing in the first three months of this year increased by 28% compared to the same period in 2023.
Data from DXB Interact showed that 967 commercial real estate transactions were concluded in the first quarter. Their number increased by 9.4% compared to the same period last year. The total value of transactions amounted to 1.9 billion AED ($540 million). In April, 277 properties were sold for the amount of 470.4 million AED ($128 million). The number of transactions increased by 8.2% year-on-year.
Innovative infrastructure improvement projects, large-scale events and new areas, such as Expo City, created at the Expo 2020 venue, will contribute to the further development of the commercial real estate market.
In the first quarter, several hotels opened, providing a total of 2,000 new rooms. These are mainly 5-star establishments built in popular areas of Dubai, such as Business Bay, Za’abeel, and Port Saeed. Today, the total number of hotel rooms in the emirate is 155,000.
New facilities are also expected to be opened in the retail real estate sector. Experts predict that by 2025, 120,000 m2 of new retail space will be available in Dubai and Abu Dhabi.
Read more Commercial real estate rentals in Dubai. What is important to know?
Luxury housing sector
The luxury housing sector in Dubai has one of the fastest growth rates in the world. It grew by 44.4% in 2022 and by 16.3% in 2023.
Demand for premium class real estate with a value of $10 million or more remains high. In 2023, the total volume of transactions with such facilities amounted to $ 7.6 billion. According to this indicator, the emirate surpasses London and New York. In the first quarter of 2024, 105 transactions with premium housing were registered, which is 19% more compared to the same period last year.
It would be fair to note one characteristic feature: the cost of luxury real estate in Dubai is significantly lower than in other popular megacities. For example, in the emirate, you can find housing with an area of about 100 m2 for $ 1 million. In London, New York and Singapore, the size of the objects in this price category will vary between 31-34 m2.
Another advantage of the emirate are developers who competently design in their projects not only living space, but also additional amenities such as a swimming pool, gym, sauna, massage rooms, yoga rooms, spa, playgrounds, shops, restaurants, coworking and much more.
A lot of rich people have been coming to Dubai in recent years. And they all strive for a luxurious lifestyle. And in an elite residential complex there may be, say, 200 apartments in one building. And there is only one such project with such a brand. There are no analogues and there will be none. You can compare this situation with branded items, clothes, cars – no matter what the situation in the world is, they will always have wealthy buyers. So it is with luxury real estate. When you invest in it, you realize that it is a unique product that will always be in demand. All luxury projects are individual, they are sold out very quickly and resold quickly.
According to forecasts by British analysts, high demand in the luxury housing sector in the emirate will lead to a 5 percent growth in the market in 2024.
The best areas for real estate investment
The average annual rental yield on Dubai real estate reached 6.3% in the first three months of 2024. The most profitable areas for the studio segment turned out to be:
- Jumeirah Lake Towers – 9,07%;
- Al Furjan – 8,41%;
- Jumeirah Village Circle – 8,38%.
The highest payback in the segment of 1-bedroom apartments was demonstrated:
- Jumeirah Village Circle – 8,24%;
- Arjan – 7,31%;
- Al Furjan – 7,29%.
In the segment of 2-bedroom apartments:
- Jumeirah Village Circle – 7,63%;
- Dubai Marina – 6,67%;
- Al Furjan – 6,51%.
Finally, in the segment of 3-bedroom apartments:
- Jumeirah Village Circle – 7,34%;
- Dubai Marina – 6,86%;
- Downtown – 5,83%.
In April of this year, the fastest growth rate of the cost of 1 m2 could be seen in the following areas:
- Mudon – 15,000 AED ($4,100), an increase of 38.6% year-on-year;
- Damac Hills – 16,000 AED ($4,400), an increase of 30.1% year-on-year;
- Al Wasl – 30,000 AED ($8,200), an increase of 18.6% year-on-year;
- Jumeriah Village Circle – 14,000 AED ($3,800), an increase of 18.2% year-on-year.
Real estate in these communities is in demand among investors interested in capital gains.
Real estate in Dubai Marina View all
- SIX SENSES RESIDENCES residential complex in Dubai Marina, UAE No. 448124 Residential complex Distance to the sea: 500 m Year of completion: III quarter, 2028, under construction
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- SKYCREST COLLECTION residential complex in Dubai Marina, UAE No. 298611 Residential complex Distance to the sea: 50 m Year of completion: I quarter, 2028, under construction
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- Seahaven residential complex in Dubai Marina, UAE No. 222805 Residential complex Distance to the sea: 1 km Year of completion: II quarter, 2028, under construction
SOBHA SEAHAVEN – Dubai Marina – Dubai – UAE Al Khail (formerly Nakheel) 1500m SOBHA Realty (formerly Dubai Marina and DAMAC Properties) 1200m DMCC (formerly Jumeirah Lakes Towers) 2200m More details 15 properties from agencies PrintDownload PDF
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Promising projects
Experts refer to the most investment-attractive off-plan projects:
- Dubai Islands. The project offers apartments, villas and townhouses located in close proximity to well-maintained beaches. Shopping malls and 5-star hotels will also be located on its territory.
- Dubai Hills. A community with developed infrastructure, including Dubai Hills Park and a huge 18-hole golf course. Its residential part will be built up with apartment buildings, villas and townhouses.
- Palm Jebel Ali. The area of the attractive project, which was relaunched last year, exceeds Palm Jumeirah by 2 times. Its apartments and luxurious mansions will be able to accommodate 35,000 families. In addition to housing, more than 80 hotels and other amenities will be built on the territory of the artificial archipelago. The full completion of the project is planned for 2040, but the first facilities will be commissioned in 2027.
- Dubai Creek Harbour. The 2.4 km2 project accommodates 10,000 residential units and 500,000 m2 of public amenities. It is located next to the Ras Al Khor Wildlife Sanctuary, which attracts tourists with a large population of pink flamingos and other representatives of the local fauna.
- Rashid Yachts and Marina. The aim of the project is to transform the Mina Rashid area into a comfortable space for living and recreation. It offers apartments, duplexes and townhouses. Shopping malls, parks, coffee shops, a yacht club and a floating hotel will also be located on the territory of the community.
Zarina Nasimova shared the most common mistakes made by investors in Dubai real estate:
The main mistake that an investor can make is not to study the information about the project on their own, not to figure out the issue, but simply entrust it to the first agent they come across. I always try to explain to the client which investments are more profitable now and what they should expect. After all, it’s their money! It is very important that the investor also study the investment legislation and know, for example, what a service charge is [regular payments for the maintenance of buildings or community – ed.] and that the owner of the property needs to pay it. People sometimes think that the real estate market of another country is not much different from the market of their native country. But this is not the case,” says the manager.
Forecasts and prospects
In April, the emirate faced the heaviest downpour in the history of meteorological observations conducted in the country since 1949. Its duration was about one day. The devastating effects of the torrential rain have prompted the local government to launch work to improve the drainage system.
Analysts believe that the natural disaster will not reduce the demand for Dubai real estate. It may fall to a minor level in the locations that were most affected by the downpour. There is a high probability that such a decrease will last only a few months.
According to forecasts of the Dubai 2040 state project, the population of the emirate will grow to 5.8 million people by 2040. Today it is 3.68 million people. Against the background of the expected growth rates, 54,400 residential properties are expected to enter the Dubai market annually. However, analysts note that in the next 5 years, local developers will be able to deliver only 200,000 objects. The low level of supply will lead to an increase in demand for real estate in the emirate.
What factors influence the growth of the market?
Market analysts identify several factors that have an impact on the Dubai real estate sector:
- A loyal policy towards foreigners. The government of the emirate is interested in attracting foreign investment, so new freehold zones are emerging here, where foreigners can own real estate on unconditional rights.
- A visa application program in exchange for investments. Investments from 750,000 AED ($204,000) are the basis for obtaining resident status for 2 years.
- Expo 2020. The international exhibition, which ended in March 2022, influenced the development of infrastructure and increased the investment attractiveness of the emirate in the eyes of foreigners.
- A well-developed tourism industry. As part of the UAE Tourism Strategy 2031, UAE hotels will be able to receive 40 million tourists in 2031.
- Sustainable development and innovation. Innovative technologies and “green” materials used by Dubai developers attract buyers who prefer eco-friendly real estate.
- Digital technologies. Virtual real estate tours, cryptocurrency payments and market analysis using AI have already become commonplace for the emirate market.
- The growing demand for luxury housing.
Zarina Nasimova cited several additional factors that contribute to the positive development of the Dubai market:
- high level of security;
- a wide range of international universities providing quality education;
- a profitable tax system;
- stable exchange rate of the UAE dirham against the dollar and the euro;
- the pleasant climate ensures the influx of tourists throughout the year.
Analysts’ forecasts
Experts predict further growth of the Dubai market. Bas Kooijman, CEO and Asset Manager of DHF Capital S.A. (Bas Kooijman, CEO and Asset Manager of DHF Capital S.A) believes that in 2024 the emirate’s real estate sector will grow by another 5%, and the country’s economy by 4.5%.
British analysts predict growth of 3.5%. Potential risks include a decrease in the pace of development of the global economy, an increase in inflation and bank rates, which negatively affect the level of demand.
Zarina Nasimova claims that real estate will rise in price by 5-15% over the current year. And although this is not much compared to 2022 and 2023, such an indicator will be a sign of market stabilization.
Hussain Sajwani, founder and head of the Damac development company (Hussain Sajwani, Founder and Chairman of Damac) said that there is a stable number of transactions in all key projects, and demand continues to grow steadily.
The entrepreneur noted that last year the construction of 20 new projects launched by his organization started in the emirate. This is a direct proof of his confidence in the Dubai economy. He believes that all current economic trends demonstrate the healthy development of the real estate sector. The external environment has almost no impact on the local market, which is facilitated by government measures aimed at attracting foreign investment and population growth.
Mahmoud Kreidie from the BSA law firm is less optimistic. He believes that the market may stop growing soon. Crady cautioned that an increase in supply levels would lead to a downturn in the sector and lower costs.
However, most analysts are not afraid of an oversupply amid Dubai’s population growth.
I do not see an overabundance of vacant real estate that would not be in demand, or that no one would rent. It doesn’t matter in which part of the emirate an apartment or a house is located – there will always be someone who wants to rent them. It is very rare that a situation occurs when a client wants to buy an apartment for personal use [on the secondary market, ed.], and she is immediately free. Usually, any real estate in Dubai is rented, and not idle,” Zarina Nasimova shared.
Mahmoud Kreidi, mentioned above, also added that favorable investment conditions will be maintained in the market for the foreseeable future. Traditionally, summer will be a period of calm when the price of real estate decreases. In the future, facilities will continue to rise in price against the background of an increase in the cost of living. This will attract investors seeking capital gains in the long term.
Summing up the results
The impressive growth figures of 2022 and 2023 did not change the dynamics in 2024 either. The cost of real estate in Dubai continues to rise against the background of an increasing population, high demand for luxury housing and attractive conditions for obtaining a long-term visa.
At the beginning of the year, analysts admitted the possibility of a market downturn as a result of a number of negative factors. Nevertheless, in the first quarter, the number of transactions increased by 17.5%, and the total cost increased by 21.9%.
Most experts are inclined to believe that in 2024 the price of real estate will increase by 5%. Some suggest that only the luxury housing sector will face such an indicator, and the entire market expects 3.5 percent growth.
There is a high probability that the summer lull will lead to a correction in prices, which will subsequently continue to rise as a result of the rising cost of living in the emirate. This season will be a profitable period for investors interested in long-term capital gains.
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