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Dubai real estate reaches new heights in Q4 2023 — ValuStrat

The Dubai real estate market had a remarkable fourth quarter (Q4) of 2023, with the city’s residential capital gains hitting a new high in a decade. The ValuStrat Price Index (VPI) had a year-on-year (YoY) increase of 19.9 percent, hitting an impressive 103.1 points. This is also equivalent to a 6.7 percent quarter-on-quarter (QoQ) increase.

VPI uses ValuStrat’s propriety research and valuations to measure the latest price movements in real estate. 

Apartment and villas thrive

According to the ValuStrat Dubai Q4 2023 Real Estate Report, apartment prices had a notable jump. In particular, the apartment segment VPI climbed by 15.4 percent YoY to 84.3 points. This surge was predominantly fueled by mid-affordable communities. In terms of annual growth rates, Discovery Gardens, The Greens, Motor City, Town Square, Dubailand Residence Complex and Dubai Production City stood out as the top performers.

Moreover, the villa market showed robust growth, with its capital values reaching 133.1 VPI points. This represents a 24.9 percent YoY increase and a 7.7 percent QoQ rise. Leading the charge were Jumeirah Islands, Palm Jumeirah, Dubai Hills Estate and Mudon, all of which posted significant annual gains.

Regarding prime properties, both villas and apartments experienced substantial valuation increases. Specifically, prime market villas hit a 10-year peak at 147 points, reflecting a 26.6 percent YoY jump and an 8.3 percent QoQ growth in capital gains. Meanwhile, prime apartments had their annual gains accelerating to 16.4 percent, reaching 94.9 index points.

More projects and transactions

The construction segment of Dubai’s real estate market was also bustling in 2023. Based on the ValuStrat report, 26,740 apartments and 3,919 villas were completed, accounting for 55 percent of the year’s preliminary estimates. Notable apartment completions are Samana Golf Avenues (233 units), Westwood by Imtiaz (188 units) and Binghatti Heights (365 units).

2024 is set to welcome an estimated 50,866 new homes into the market.

The off-plan market also saw significant developments as the average ticket size of off-plan homes climbed by 18.8 percent YoY to reach AED 3.7 million. Nonetheless, off-plan Oqood (contract) registrations slipped by 21.3 percent YoY.

Transaction activities in Q4 were also particularly vibrant. A total of 12,001 ready secondary home sales were recorded — the highest in history. It reflects a 24.1 percent YoY increase and 11.2 percent QoQ rise. Investments totaled AED25.6 billion. The citywide average transacted price for ready units in Q4 was AED14,520 per square meter. This mirrors a 5.8 percent YoY increase but a 0.9 percent QoQ decline.

Boom in rentals and office spaces

Rental markets also thrived, with residential asking rents jumping 12.8 percent YoY. The market for villas showed a modest annual increase of 9.2 percent, while apartment rents surged by 15.9 percent YoY. This rental growth indicates the continuous demand for housing in Dubai, further bolstered by an estimated residential occupancy rate of 86.7 percent during Q4.

The office sector mirrored the residential market’s positive trajectory. In particular, the VPI for Dubai’s office capital values growing by 7.5 percent quarterly and an impressive 32.1 percent annually, reaching a record 110.8 points. 

The value of Grade A office spaces increased by 37 percent over the past year. Meanwhile, Grade B office spaces saw a 24 percent increase in value during the same period.

Looking ahead

In 2024, the Dubai real estate market is expected to continue booming as the UAE economy is set to expand by 4 percent, according to estimates by S&P Global. This expansion will primarily be driven by the city’s non-oil sector. Additional real estate drivers include increased demand due to Dubai’s rising population, a higher number of tourists and better transportation. 

For a detailed perspective on the property market, visit: Dubai - Real Estate Review Q4 2023