Are you able to keep up with skyrocketing property prices and rents in Dubai? You are not alone in this case. The real estate zone in Dubai has seen a record number of transactions as each property’s prices and rents expanded more than 20 percent, according to the current information. This increase has left many people wondering about the future of the property market in Dubai.
Dubai Real Estate Sector Sees 44% Surge In Transactions As Property Prices And Rents Increase; One Area Dominates Both Villa And Apartment Sales
In May 2024, the total number of residential transactions stood at 15,766. This is the highest monthly figure on record to date, marking an increase of 44.2 percent compared to the previous year. For the year to date up to May 2024, the total volume of sales transactions reached 62,180. This represents a staggering increase of 384.3 percent from the 2019 comparable figure, while also outperforming the 2023 record-high by 30 percent.
This year-on-year growth has been supported by a 42.6 percent increase in off-plan sales and an 11.3 percent rise in secondary market sales. Dubai’s residential market has started seeing a significant upward shift in which price bracket transactions are happening.
The importance of available opportunities in the affordable and core market segments cannot be understated. In May 2024, the number of transactions priced below AED1,000 ($272) per square foot registered a decline of 19.3 percent from the comparative period a year earlier.
However, the core market continues to grow, marking a year-on-year increase of 64.1 percent in transactions priced between AED1,000 ($272) and AED2,000 ($544) per square foot. Given the upward pressure on prices and strong demand for upper-mid-end properties, the AED2,000 ($544) to AED3,000 ($816) bracket saw an increase of 154 percent in activity levels in the 12 months to May 2024.
The lack of available stock in the higher-end segments of the market is impacting activity levels. Sales of residential properties priced between AED3,000 ($816) and AED8,000 ($2,178) per square foot registered a drop of 19.5 percent in the year to May 2024. Properties priced at AED8,000 ($2,178) per square foot and above represent only 0.2 percent of total sales registered in May 2024, down from 0.3 percent a year earlier. This is due to the limited levels of demand and availability of such assets.
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Price Growth And Market Performance
Elevated levels of activity have also continued to underpin stronger-than-expected price growth. In May 2024, average residential prices in Dubai registered a year-on-year increase of 20.1 percent, down slightly from the 20.7 percent growth recorded a month earlier. Over the same period, average apartment prices increased by 19.8 percent, and villa prices saw a rise of 21.8 percent. These figures highlight the robust demand across different property types.
In the rental market, robust levels of demand continue to drive performance. In the year to May 2024, average residential rents in Dubai increased by 21.1 percent. This increase has been underpinned by a 22.2 percent rise in average apartment rents and a 13.1 percent rise in average villa rents.
Higher rents within Dubai’s core and prime residential areas have led to a spillover into secondary communities, which are now recording considerable increases in rents on an annual basis. It is expected that rental rates will continue to increase, but not at the same pace.
Several key and prime residential neighborhoods are heading towards single-digit growth due to affordability constraints. These constraints are beginning to catch up, affecting the rate of rental increases. Demand in Dubai’s residential market continues to record unprecedented numbers. For the year to date up to May 2024, total transaction volumes have reached 62,180, up 30 percent from 2023 and an astonishing 384.3 percent from the same period in 2019.
Despite the strength of this demand, there are concerns about the potential dampening impact of new launches on prices. However, the absorption of new stock remains at markedly high levels. At least 70 percent of units launched since 2022 have been sold to date. Due to lags in data, this number is likely higher.
In Dubai’s core and established residential areas, this figure is, on average, well above 80 percent. In certain core and prime communities, it stands fairly close to 100 percent. A significant portion of this demand in the off-plan market is originating from owner-occupiers.
Impact On Sales And Rental Prices
In the longer term, the increase in supply is expected to provide some relief to the rental market. However, for sales prices, it is unlikely to create downward pressure. Some price stability is beginning to take hold. In the year to date up to May 2024, 88.4 percent of listings’ prices have remained unchanged, up from 79.7 percent over the same period a year earlier. During the latest period, 4.1 percent of listings saw price increases, down from 9.9 percent a year earlier.
In both apartment and villa segments of the market, Palm Jumeirah recorded the highest sales rates per square foot. As of May 2024, average rates reached AED2,804 ($763) for apartments and AED5,228 ($1,423) for villas. These high rates reflect the premium nature of properties in this location and the continued demand for luxury living spaces.
Arshad Darbar’s Thoughts
Arshad Darbar, a seasoned real estate expert with several years in the market, offers his insights on the recent surge in Dubai’s real estate transactions. He believes this trend highlights the city’s enduring appeal and robust market fundamentals.
According to Darbar, the 44% increase in transactions signifies strong investor confidence and a dynamic property market. He notes that the rise in property prices and rents reflects high demand across various segments, particularly in prime and core areas.
Darbar points out that while new launches are expected to provide some relief in the rental market, the sales prices are likely to remain stable due to strong absorption rates of new stock. He also emphasizes the importance of understanding the shifting dynamics in price brackets, suggesting that investors should consider both affordable and high-end market segments for potential opportunities.
Overall, Darbar views the current market conditions as a positive indicator of Dubai’s economic resilience and growth prospects in the real estate sector.
Conclusion
The Dubai real estate market has experienced a significant surge in transactions, driven by rising property prices and rents. The highest monthly transaction figure on record was achieved in May 2024, reflecting the strong demand and robust market performance.
While new launches and increased supply may impact the rental market, sales prices are expected to remain stable. Investors and residents alike continue to navigate the dynamic landscape of Dubai’s property market, with opportunities and challenges shaping the future of real estate in the city.
