Dubai continues to build on its position as a global economic hub in 2023, with the emirate achieving average growth of 3.2 per cent year-on-year to June this year, defying global economic trends in spite of increasing regional geo-political unrest. Its best-performing sectors by GDP include logistics and warehousing at 10.5 per cent followed by accommodation and food services at 9.2 per cent.
It is no surprise that Dubai’s real estate sector also demonstrated substantial GDP growth over the same period, racking up 3.6 per cent, thanks to an influx of investors and new residents who continue to pour into Dubai for its business-friendly regulatory environment and lifestyle offering.
High demand for affordable, high-quality apartments and the significant price uplift in luxury properties have helped to raise the price of apartments in all of Dubai’s affordable neighbourhoods. The apartment segment saw a 1.6 per cent increase in September 2023, with an overall year-on-year increase of 11 per cent, the highest value growth for apartments in over 10 years, according to a report by ValuStrat.
ValuStrat also highlighted in its June 2023 report that villa prices reached an all-time high, breaking price records previously set in June 2014, increasing by 15.8 per cent on average since June last year. By area, villas in Jumeirah Islands saw the largest annual increase of 20.8 per cent, followed closely by Emirates Hills at 19.6 per cent, and Palm Jumeirah at 17.9 per cent. These areas hold some of the most expensive homes in Dubai and clearly indicate the increasing demand by ultra-wealthy buyers who are making Dubai their new home.
According to Savills, the 5-year average in sales volumes is up 209 per cent.
In the first half of 2023, Dubai saw more than 57,000 property transactions, a 44 per cent increase over the year before, with ready home sales accounting for 47 per cent of the volume, the highest demand we have seen to date for ready homes as new residents look for immediate accommodation.
Dubai also witnessed record off-plan sales of $9.3 billion in the second quarter of this year, taking 58.7 per cent share versus secondary market properties, a stark shift from the previous years where ready homes dominated sales. While off-plan sales volumes dipped in September 2023, likely due to people returning from holidays and getting back to the normal rhythm of work and school, demand momentum increased in the secondary market with ready home sales rising significantly.
All in all, record sales of plots, villas and apartments hit $2.23 billion in a single week ending 20 October, clearly showing that demand remains strong.
Buyers in the mid-market space are looking for a mix of luxury, amenities, and affordability, in both ready and off-plan, where they can enjoy the benefits of community living in a building versus more expensive villas and townhouses. The mid-market is by far the single largest segment in demand in Dubai, with competitively priced residential off-plan and ready units taking the largest slice of the sales volumes.
Dubai continues to attract more residents and small business owners who are looking for affordability and quality. While the initial value growth started in the luxury segment last year, the mid-market is clearly catching up and homeowners will continue to see this rising trend through 2024.
Population growth also supports a positive outlook for further demand across all property sectors. In June 2023, Dubai’s Statistic Centre revealed that its population had grown by 100,000 residents since June of last year. Top property investors who are moving to Dubai remain largely from the UK, Russia, India, Italy, France, China, and other Middle East countries. This growth trend is expected to continue through 2024 and possibly 2025, indicating that the rising price trends will unlikely reverse soon, with many analysts predicting 14-15 per cent growth in property values in 2024.
As we come to the end of 2023, the performance of Dubai’s real estate sector demonstrates the emirate’s success in maintaining its growth and momentum. Record sales of plots this year also highlight the confidence of existing and new developers in the real estate sector, with many new projects in the pipeline for 2024. The sector’s growth over the last two years is a strong indicator of what can be expected next year, with most of the real estate community remaining extremely positive for the year ahead. While the number of under-construction projects across the emirate, it’s not difficult to assess that the real estate boom here is in full swing.
We are also confident that the growth momentum will be sustainable in the years to come.
For a detailed perspective on the property market, visit: Dubai - Real Estate Review Q3 2023