Dubai’s real estate market saw a big surge in off-plan sales in May. According to current figures, demands for off-plan homes have achieved first-class figures, with new contract registrations increasing by an impressive 41.6% compared to the previous month.
This surge resulted in more than 10,000 transactions, with off-plan sales accounting for a major 69.4% of total housing income. This situation underscores the growing confidence of buyers in properties that are still under construction, as they may be increasingly inclined to put money into future homes.
Dubai’s Residential Market Is Driven By Off-Plan Sales
The off-plan registrations for residential properties have seen a substantial 76.3% year-on-year increase. This surge in demand is largely driven by popular communities such as Jumeirah Village Circle and Meydan One.
These areas have become hotspots for buyers looking to secure homes before they are completed, contributing significantly to the overall increase in off-plan sales.
Record Setters: Discovery Gardens And Dubai Hills Estate
Among the various communities in Dubai, Discovery Gardens and Dubai Hills Estate stood out in May by setting new records for the most off-plan homes sold in a single month. These areas have become particularly attractive to buyers, indicating their rising popularity and the growing demand for future-ready properties in these locations.
The success of these communities highlights the broader trend of increased interest in off-plan sales across Dubai.
Increase In Ready Home Transactions
While off-plan sales dominate the market, the volume of ready-home transactions has also shown a notable increase. There has been an 8.1% year-on-year rise in ready home sales, with a remarkable 45.9% increase since April.
The most popular areas for these transactions include Jumeirah Village Circle (8.3%), Business Bay (6.6%), Dubai Marina (5.9%), Downtown Dubai (5.3%), and Jumeirah Lake Towers (3.9%). These figures indicate that ready homes are still in demand, even as off-plan sales take the lead.
Additionally, the luxury market in Dubai is thriving, with 16 transactions for ready properties priced over 30 million UAE dirhams completed in prestigious areas. This shows that high-end properties continue to attract buyers, contributing to the overall health of the real estate market.
Resilient Capital Values Despite Challenges
Despite facing challenges like the record rainfall in April, which caused flooding in several communities, the demand for residential properties in Dubai has remained strong. This resilience has prevented any significant impact on home valuations.
The villa capital values increased at similar monthly rates in May. For instance, Palm Jumeirah properties saw an impressive annual capital value increase of 41.7%. Other areas with notable gains include Jumeirah Islands (41.1%), Dubai Hills Estate (37.5%), Emirates Hills (32.5%), and The Lakes (32.1%).
Most established villa communities in Dubai have surpassed their previous capital value peaks from 2014. Notably, Palm Jumeirah became the first apartment area to exceed its previous peak, reflecting a strong recovery in property values across the board.
Rising Apartment Prices
Apartment prices in Dubai have also been on the rise. In May, monthly apartment prices increased by 1.8%, which is 0.2% more than in April, marking a 22.4% annual growth rate.
The areas with the highest apartment capital gains compared to the previous year include Discovery Gardens (34%), The Greens (32.6%), Palm Jumeirah (30.9%), Al Quoz Fourth (29.1%), and The Views (28.1%). These figures demonstrate a strong upward trend in apartment values, contributing to the overall strength of the real estate market.
Concerns Over Property Valuations
While the market shows robust growth, there are concerns about property valuations. A report pointed out a correlation between rising average prices per square foot and shrinking average home sizes in Dubai.
This trend suggests that buyers are paying more for less space, raising questions about the sustainability of these price increases and the overall affordability of properties in the long run.
Arshad Darbar’s Thought
Arshad Darbar, a seasoned professional in the real estate market with several years of experience, shares his insights on the recent surge in off-plan sales in Dubai. According to Darbar, the current trend highlights a significant shift in buyer confidence and market dynamics.
“The record-breaking demand for off-plan properties signifies a strong belief in Dubai’s long-term growth and stability,” Darbar states. He emphasizes that investors are increasingly attracted to the potential for higher returns on properties that are still under construction.
“Buyers are not just looking at the immediate value but are investing in the future potential of these developments,” he adds.
Darbar also notes the strategic importance of communities like Jumeirah Village Circle and Meydan One. “These areas have become focal points due to their strategic locations, planned infrastructure, and community amenities.
Regarding the rising apartment prices and capital values, Darbar believes this trend is a positive indicator of market health. “The increase in property values, especially in established areas like Palm Jumeirah and Dubai Hills Estate, reflects a strong demand and limited supply. This balance is crucial for sustaining market growth,” he says.
However, Darbar also expresses caution over the correlation between rising prices and shrinking home sizes. “While the market is booming, we must ensure that affordability and value for money remain in check. Sustainable growth should benefit both investors and end-users,” he concludes.
Conclusion
Dubai’s residential market is experiencing a remarkable surge, driven largely by the booming off-plan sales. The demand for properties under construction is at an all-time high, reflecting strong investor confidence. Ready home transactions are also on the rise, and the luxury market continues to perform well.
Despite challenges like the April floods, property values have remained robust, with significant gains in both villas and apartments.
As the market continues to evolve, it will be interesting to see how these trends develop and what they mean for buyers and investors in Dubai’s real estate market.
