Expatriate families moving to Dubai for the start of the school year traditionally spur an increase in real estate transactions, while predictions of US interest rate cuts herald a lively property market in the emirate for the second half of 2024.
More than 326,000 foreign and emirati students are slated to head back to Dubai private schools alone on Monday, August 26 after a two-month break.
According to Andrew Elliott, a director at Chestertons Mena, the new school year is traditionally a “key milestone” in UAE real estate, driven by new expatriate families relocating to the nation and existing residents switching accommodation for a shorter commute or different educational options.
“Many families new to the UAE will time their arrival to coincide with the start of the academic year,” Elliott says. He says Chestertons is also seeing significant movement among people already based in the country.
Lewis Allsopp, chairman of Allsopp & Allsopp echoes the feeling. “External factors always influence the real estate market, and the start of a new school year is definitely one of the big drivers,” he says.
“As many new families relocate to the city ahead of the school year, short-term rentals also see an uptick in demand as they require a place to live in whilst house-hunting.”
Last year 11,960 sales were recorded in September, the highest monthly tally of 2023, according to figures shared by Engel & Völkers Middle East.
Both 2022 and 2023 recorded double-digit jumps in sales between the June-July and August-September periods, at 17 percent and 15 percent, respectively.
Similar trends are visible in the rental market.
New rental contracts grew 11.6 percent from June-July in August-September 2022, with an even bigger rise the following year, or 18 percent from June-July to August-September 2023, according to the data shared by the consultancy.
“The trend of increased transactions during the back-to-school season is clear,” says Daniel Hadi, Engel & Völkers Middle East’s chief executive.
The back-to-school rush, however, is only one factor at play. It coincides with the beginning of the end of the hottest time of the year as well as the Dubai economy’s return to business as usual.
Analysts at ValuStrat say the increase in transactions in Dubai’s back-to-school period is “not substantial” and can largely be explained by people returning after “summer absences”.
Many existing Dubai families are satisfied with the school choices typically available in their neighbourhood.
According to industry sources it is new families relocating to the city that prompt most of the school-related real estate activity that takes place at this time of the year.
“However, for some families, the availability of better schooling options or the need to reduce commute times can be strong motivators for moving,” says Olga Pankina, chief operations officer at Whitewill in Dubai.
According to Pankina, residents with school-aged children are searching for “nearly ready” family-friendly communities or larger homes, as well as renovating existing spaces to make room for children’s study rooms or other educational needs.
Inflation cooling in the US and the Federal Reserve inching towards lowering interest rates might further shore up the Dubai real estate market in the remainder of the year, which is historically stronger than the first half.
“These rate cuts, anticipated from September onwards, should reduce borrowing costs and enhance affordability for buyers, potentially leading to growing end user demand and a busier market towards the end of the year,” says Hadi of Engel & Völkers.
Sales transactions in H2 grew by 28 percent in 2021, 27.6 percent in 2022 and 16.5 percent in 2023 when compared with the respective H1, according to the consultancy.
Arash Jalili, chief executive of Unique Properties, says there is likely to be continued high demand for family-oriented properties in well-established neighbourhoods, especially those near top schools. This is "expected to drive moderate price increases in these sought-after areas,” he says.
“In response to this demand, developers are launching new projects designed for families," he says. This will "increase the housing supply, offering more choices for buyers and potentially moderating price growth".
If anything is changing, it is that the summer slowdown is no longer as pronounced as it used to be as foreign nationals are now relocating to Dubai year round amid the emirate’s growing reputation for high quality of life, education, safety and healthcare.
“Interestingly, whilst the summer was slower, as it always is, it was the busiest we have experienced by comparison of all previous years,” says Will Mckintosh, a regional partner at Knight Frank.
“As such, we are finding the property market is becoming less seasonal as it matures.”
For a detailed perspective on the property market, visit: Dubai - VPI Residential Capital Values - July 2024
