Dubai's real estate landscape is all set for another dynamic year, as ValuStrat unveils its comprehensive financial year report for 2024
Dubai’s real estate sector displayed remarkable resilience in 2023, so much so that property prices are now expected to rise exponentially amid higher demands from local and international buyers alike.
As the industry looks ahead to 2024, the air is thick with news and speculation about the trajectory of Dubai’s real estate market. While predictions vary, one constant factor is the anticipated continuation of resilience in terms of transactional activity. The momentum gained in 2023, marked by a decade-long peak in office space transactions and sustained growth in demand, is expected to carry forward into the new year.
Let’s look into ValuStrat’s prediction for the year:
- The UAE Central Bank has projected an economic growth rate of 4.3% for 2024.
- IMF estimates that’s UAE’s real gross domestic product to grow by 4% in 2024.
- The IMF said UAE’s current account balance is expected to be about 8.2% of GDP in 2023 and 7.7% of GDP in 2024.
- S&P Global expects the UAE economy to expand 4% in 2024 on non-oil sector growth.
- A potential surge in the influx of talent and investors may arise as a result of competitive adjustments in business and office environments.
Office prices and rents
- Office capital values soared in 2023, crossing the 100-point mark from their base in Q1 2015 to reach 103 VPI points during the third quarter of 2023. Continued annual growth is anticipated in key Dubai business districts such as: Jumeirah Lake Towers, DIFC, Business Bay, Downtown Dubai, and Barsha Heights.
- Office space demand has surged due to government initiatives like the Golden and Green visa schemes and reforms in companies’ laws. Growing start-ups and expansion of firms post-pandemic has further supported the commercial real estate market and we can expect the same trend to continue in 2024.
- In 2023 office space sales reached a decade-long peak with 669 transactions during the last quarter. Accordingly, sustained growth in commercial demand is anticipated during the first half of 2024.
- DIFC and Downtown Dubai are expected to sustain high growth due to robust demand for Grade-A office space.
- The trend of increased demand for smaller office space in Jumeirah Lake Towers and Business Bay is likely to remain.
- Notable upcoming hotel openings include The Lana, Siro Dubai, Five Luxe, Six Senses The Palm, Mama Shelter, Mandarin Oriental in Wasl Tower and Ceil Tower.
- Four to five star hotels may continue to take majority of share in upcoming hotel stock.
- Local guests will retain their importance as key drivers of occupancy and revenues for affordable to mid-affordable hotels.
Residential prices and rents
- Capital values are projected to experience a 5% to 7% increase in 2024, indicating a slightly slower growth rate compared to the previous year.
- Dubai real estate cycle likely heading towards a new phase in 2024, foreseeing a resurging apartment market versus more tempered growth in the villa market.
- Potential lower mortgage rates in 2024 may entice tenants to transition to home ownership, given the current trend of faster rising rents compared to capital values.
- The recently announced Dubai Metro Blue line is expected to influence demand in communities with improved transport links such as Dubai Silicon Oasis, Ras Al Khor, Dubai Creek Harbour, and International City.
- Apartment rents could continue to rise, especially for new contracts, and existing tenants might experience increases in annual renewals due to updates to RERA rental calculator.
- Villa rents have begun stabilising, having reached possible price ceilings, as buyers pursue more affordable options. This trend is anticipated to persist in early 2024.
- For the short term, investors and buyers alike may need to be extra cautious, particularly towards high-end villa communities.
- Upcoming shopping centres: Nad Al Sheeba Mall adding 32,516 sq m GLA and Agora Shopping Mall at Jumeirah First with 507,975m2 of GLA.
- The share of revenue coming from online transactions locally and globally is expected to increase with Dubai’s e-commerce sales projected to hit $7.6 billion by 2025.
- Brick and mortar mall operators could continue to suffer from downward pressures from burgeoning e-commerce sector causing lower rents and higher vacancy.
Laws and regulations
- Emiratisation targets will be raised in 2024 and 2025 and companies with 20 to 49 workers will be required to hire one UAE national in 2024 and another one in 2025.
- The UAE is set to implement changes to the Labour and Domestic Workers Law at the beginning of 2024.
- Anticipated tourist attractions on the horizon include the Real Madrid Theme Park at Dubai Parks and Resorts, as well as the inauguration of Ciel Tower in Dubai Marina, poised to become the tallest hotel globally.
- La Mer which has been rebranded as J1 Beach is also set to open in early 2024
- Dubai International Airport is expected to hit 90 million passenger mark for first time in 2025.
For a detailed perspective on the property market, visit: Dubai - Review 2023 - 2024 Outlook