Dubai homes for sale today are about a quarter smaller than their equivalents four years ago, despite average prices growing by more than half, industry data shows.
But experts claim this is a result of the rise in demand for smaller units, which are still substantially bigger and more affordable than those in rival global cities.
The average property unit being sold in Dubai was around 2,087 sq ft in 2020 and cost AED866 ($235) per sq ft, according to research by consultancy company ValuStrat and based on official Dubai Land Department data.
The size of units has decreased about 26 percent to 1,545 sq ft last year, while the average price has risen to AED1,353 per sq ft, making the city 56 percent more expensive compared with 2020.
Haider Tuaima, director of real estate research at ValuStrat, says the size of properties is now comparable to the smaller-sized units favoured in 2014 and 2010, but he believes buyers are opting for smaller units because they cannot afford the rising prices.
At the same time, Tuaima says, developers are adapting to the need for affordability by building smaller units and the rise in interest rates means buyers’ liquidity is being squeezed.
He believes the trend is likely to continue as off-plan units on offer are smaller again.
Consumer demand
Despite the data, real estate agents argue that the shrinking size of units is a reflection of consumer demand in the market.
“A noticeable trend is emerging in some new communities where smaller units are being introduced,” says Louis Harding, managing director at real estate agency Betterhomes, adding that it would be inaccurate to say that units are getting smaller because developers are trying to cut costs.
“On the contrary," he argues, "they are investing significantly more in development and community resources [with] the creation of lagoons, artificial beaches, and impressive cafes and restaurants, showcasing a stark contrast to communities built 15 or 20 years ago."
Lewis Allsopp, chairman at real estate agency Allsopp & Allsopp, says Dubai's trend toward smaller homes has opened up a new buyer demographic.
“Smaller units mean lower market entry points, making homeownership accessible to a wider range of buyers. Savvy buyers and investors understand the value proposition," he says.
"A smaller, well-designed apartment in a sought-after location with exceptional amenities offers a superior lifestyle compared to a larger, dated unit without these perks.”
Global scale
Betterhomes’ Harding points out that when you index the price per square foot in Dubai against other major global cities, the units are still bigger and prices more affordable.
The Global Property Guide surveyed the average buying price for a one-bedroom apartment in the most expensive region in global cities, with prices updated in September 2023.
Dubai averaged $3,864 per sq m, compared with $25,133 in Hong Kong, $18,632 in Singapore, $17,702 in Zurich, $10,966 in Paris, $6,180 in Berlin, and $4,691 in Tokyo.
Another analysis, from Numbeo, found properties in San Francisco averaged $19,088 per sq m, $17,438 in New York and $17,133 in London.
“International investors from cities like London, Hong Kong, and Paris are accustomed to smaller, urban living spaces,” Allsopp said. “For them, Dubai's optimised apartments are not a compromise.”
For a detailed perspective on the property market, visit: Dubai - Review 2023 - 2024 Outlook
