The Dubai residential market continues to show resilience and growth, as detailed in the June 2024 ValuStrat Price Index (VPI) report. The valuation-based house price index provides a comprehensive overview of the capital values of ready freehold homes in Dubai, highlighting key trends and metrics that define the current state of the market.
Capital values and market growth
In June 2024, the capital values of ready homes in Dubai experienced sustained growth. The ValuStrat Price Index reached 178.2 points, reflecting a substantial annual increase of 28.2% and a monthly rise of 2.2%. This growth indicates a robust recovery and expansion in the market, marking a positive trajectory for investors and homeowners alike.
The performance divergence between villas and apartments is noteworthy. Villas scored 226.6 points, while apartments were at 146.7 points, both relative to a baseline of 100 points established in January 2021. This data indicates that villas have been appreciating faster than apartments.
Notably, villas in all established freehold communities have surpassed their previous capital value peaks from 2014. This trend underscores the high demand and appreciation for villa properties. Only Palm Jumeirah has exceeded the 2014 value peak in the apartment segment.
Month-on-month, apartment prices increased by 1.9%, achieving a record annual growth of 23.4%. The top performers in apartment capital gains year-over-year include Discovery Gardens (34.5%), The Greens (33.7%), Palm Jumeirah (31.1%), and The Views (29.7%). For villas, the capital gains were 2.4% compared to May and 33.4% year-over-year, with Palm Jumeirah (43.1%), Jumeirah Islands (42.5%), Dubai Hills Estate (38.5%), and Emirates Hills (33.6%) leading the segment.
Sales transactions analysis
Despite the rising capital values for ready homes, sales transaction volumes have declined, marking the first dip since the pandemic.
Ready home transactions experienced annual declines, with a drop of 19.4% since May and 2.6% year-over-year. Off-plan property sales presented mixed results. Oqood registrations for off-plan homes increased by 33% annually but saw a monthly decline of 31.9% from May’s record highs.
The prime home sales segment recorded 15 transactions for ready properties priced over AED 30 million, predominantly in sought-after areas like Palm Jumeirah, Business Bay, Jumeirah Bay Island, Emirates Hills, and Dubai Hills Estate.
Key developers and popular locations
In June 2024, leading developers included Emaar, Damac, Azizi, Sobha, Danube, and Nakheel. Emaar topped the developer sales charts with a 12% market share, followed by Damac and Sobha at 8.2% each and Azizi at 5.8%.
Top off-plan locations transacted included Business Bay (9.7%), Jumeirah Village Circle (8.2%), Meydan One (6.4%), and Arjan (4.7%). For ready homes, Jumeirah Village Circle (8.2%), Business Bay (6.7%), Dubai Marina (6%), Downtown Dubai (4.7%), and International City (3.7%) were the most popular.
Market trends and outlook
Our analysis highlights the dynamic nature of Dubai's real estate market, showcasing areas of significant growth and identifying key trends that influence investment decisions. The continuous rise in capital values, especially for villas, underscores the demand for high-quality, ready properties in prime locations.
The divergence in performance between villas and apartments suggests that while both segments are growing, villas are currently more attractive to high-value investors. This could be due to the larger living spaces and the prestige associated with villa communities in Dubai.
The decline in sales transaction volumes, despite the increase in capital values, could indicate a possible shortage of available ready stock in key established areas, as owner-occupiers and landlords seem unwilling to sell their properties anytime soon. Investors might also be taking a more cautious approach, waiting for the right opportunities amidst rising property prices.
The June 2024 ValuStrat Price Index paints a picture of a thriving and maturing Dubai residential market. With capital values on the rise and selective growth across various segments, the market presents numerous opportunities for investors and homeowners. However, the decline in transaction volumes calls for a closer examination of market dynamics as stakeholders navigate this evolving landscape.
Overall, the Dubai real estate market cycle is very much at its upswing stage and continues to demonstrate resilience and growth, making it a key player in the global property market. As the market stabilises and matures, it will be crucial to monitor these trends and adjust strategies accordingly to maximise investment returns.
For a detailed perspective on the property market, visit: Dubai - VPI Residential Capital Values - June 2024
