Unstoppable? Dubai’s property market surges 30% in 2024

As the first half of 2024 concludes, Dubai’s property market continues to exhibit robust growth, with a significant influx of foreign buyers, absorption of existing inventory, as well as movement into suburbs, according to data released by real estate firms.

Post-new year stability and rising prices

Following what looked like post-New Year stability in early Q1 2024, property prices in Dubai’s most searched-for areas have risen again, countering any speculations of a slowdown.

Despite the ongoing increase in property prices, Dubai remains highly affordable compared to other luxury real estate destinations worldwide, making it an attractive option for new and institutional investors, solidifying the city’s position as a global investment hub, as per Bayut’s latest report.

Its report on H1 trends shows that prospective homebuyers and investors for affordable properties have shown heightened interest in areas such as International City, Dubai South, DAMAC Hills 2, and The Valley by Emaar. Additionally, individuals looking for mid-range properties have gravitated towards neighbourhoods such as Jumeirah Village Circle, Jumeirah Lake Towers, Al Furjan, and The Springs.

Conversely, investors interested in luxury properties have focused on a range of options available in Dubai Marina, Business Bay, Arabian Ranches, and Dubai Hills Estate during H1 2024.

Record growth in sales volume

In the first half of 2024, Dubai’s property sector saw a year-on-year volume growth of more than 30 per cent, as reported by Property Monitor.

May 2024 marked a record-breaking month for sales transactions in Dubai.

Property Monitor reported a 47.7 per cent month-on-month increase and a 45.9 per cent year-on-year rise in sales transaction volumes. Similarly, haus & haus also noted that May was their best performing month, possibly due to delayed transactions from April caused by unprecedented storms and flooding in Dubai.

Rising demand for villas

The demand for villas continues to surge as Dubai’s population grows and matures. Property Monitor’s H1 figures indicate significant volume growth for villas, driven by residents looking for family-friendly, long-term living options.

In response, developers have launched 3,323 villas in H1, with many expected to be completed by 2028.

Emaar has announced key master community projects such as The Oasis, The Heights Country Club and Wellness, and Grand Polo Club & Resort, which have garnered strong interest from investors.

High demand for new real estate projects

More than 80 per cent of new property units launched in Dubai since 2022 have sold out, highlighting the high demand for off-plan projects.

Dubai Land Department data shows nearly 214 projects launched, with 148 currently active.

Taimur Khan, head of research for CBRE in the Middle East, noted that despite concerns about an oversupply dampening prices, new stock absorption remains high, with at least 70 per cent of units launched since 2022, sold to date.

Trends for buying properties in Dubai

Meanwhile, Bayut’s data indicates that sales prices for apartments and villas in prominent Dubai neighbourhoods have recorded significant increases, with the highest increase reaching up to 17 per cent for villas in The Valley by Emaar, during the first half of 2024.

In the mid-tier property segment, there has been a noticeable increase in average sales transaction prices for apartments, varying from 12 per cent to 40 per cent, with the most significant growth observed in Jumeirah Lake Towers.

Similarly, sought-after areas featuring mid-tier villas have observed increases in average transaction sales prices ranging from 4 per cent to 23 per cent. Most areas in the luxury property segment have consistently recorded increases in transactional prices, ranging from 5 per cent to 24 per cent.

Record transaction volumes

According to data from Bayut’s Dubai transactions, which leverages data from the DLD, the first half of 2024 saw a total of 43,075 property sale transactions. These transactions amounted to a combined value of Dhs122.9bn, covering both residential and commercial properties.

Shifts in price brackets

According to CBRE, there has been a notable shift in market dynamics. The sales numbers in the first half of 2024 have been marked by a shift in transaction price brackets.

Transactions below Dhs1,000 per square foot declined by 19.3 per cent in May 2024 compared to the previous year.

However, transactions in the Dhs1,000 to Dhs2,000 per square foot range grew by 64.1 per cent. The Dhs2,000 to Dhs3,000 per square foot bracket saw a significant increase of 154 per cent in activity.

The higher-end segment, priced between Dhs3,000 and Dhs8,000 per square foot, experienced a 19.5 per cent drop in activity due to limited stock availability. Properties priced above Dhs8,000 per square foot accounted for just 0.2 per cent of total sales in May 2024, as per CBRE data.

Changing buyer preferences

Taimur Khan, head of research for CBRE in the Middle East, noted that despite concerns about an oversupply dampening prices, new stock absorption remains high, with at least 70 per cent of units launched since 2022 sold to date.

Sales transactions have moved away from Dubai’s core and prime residential hubs, with buyers now exploring other areas.

Tatiana El Bazi, senior research analyst at CBRE, noted that recent data indicates a trend of buyers shifting away from the city’s central and prime areas.

Trends for renting properties in Dubai

In terms of ROI based on projected rental yields for apartments, areas such as Dubai Investments Park (DIP), and Discovery Gardens, have emerged as top choices for potential investors seeking affordable properties, offering yields of up to 11 per cent.

For mid-tier apartments, Dubai Sports City, Dubai Silicon Oasis, and Motor City are particularly attractive, with rental yields surpassing 9 per cent.

Additionally, luxury apartment locations such as Green Community, Al Sufouh, and DAMAC Hills have shown impressive returns of up to 9 per cent, outpacing many global real estate markets.

Bayut’s analysis of ROI trends for villa communities also shows a positive outlook. Buy-to-let villas in International City offer an average ROI exceeding 7 per cent, making them attractive for investors.

Areas such as DAMAC Hills 2 and Wasl Gate provide ROI percentages above 6 per cent.

Mid-tier villas in Jumeirah Village Triangle, Jumeirah Village Circle, and Mudon have projected ROIs ranging from 6 per cent to 8 per cent.

In the luxury villa market, The Sustainable City stands out with an ROI exceeding 7 per cent, due to the unique features of the properties and limited market supply. Additionally, communities like Tilal Al Ghaf and Al Barari, which cater to family needs, present strong ROIs of over 6 per cent.

Bayut said its data analysis indicates notable increases in advertised rental prices across various segments in popular areas.

Affordable apartment rentals have seen surges ranging from 4 per cent to 31 per cent, with studio flats in Al Nahda reporting the most significant price hike. Mid-tier apartments have experienced upticks of up to 15 per cent. Luxury apartment rentals have generally increased by up to 7 per cent, although some units in Business Bay and Downtown Dubai reported price decreases of under 6 per cent.

Budget villa rentals have gone up by as much as 12 per cent. Mid-tier villa rentals have increased by up to 15 per cent, with certain bed types in Town Square seeing price decreases of under 1 per cent. Luxury villa rentals have surged by up to 27 per cent, with DAMAC Hills recording the highest increase for its limited inventory of 6-bed units.

For those seeking affordable accommodation, Deira and Al Nahda have become popular choices for apartments, while DAMAC Hills 2 and Mirdif have attracted interest for villas.

In the mid-tier segment, Jumeirah Village Circle (JVC) and Bur Dubai apartments have remained in high demand among tenants, whereas properties in Town Square and JVC have appealed to those in search of villas.

In the luxury category, Dubai Marina and Business Bay have maintained their popularity for apartment rentals, while Dubai Hills Estate and Al Barsha have been the desired destinations for high-end villa rentals.

Increase in rental prices

Transactional rental prices in affordable neighbourhoods for both villas and apartments have generally increased by 2 per cent to 9 per cent. Mid-tier segment apartment and villa rentals have reported increases of up to 10 per cent.

In the luxury real estate segment, transactional prices for both apartment and villa rentals have also risen by up to 10 per cent.

Commenting on the findings, Haider Ali Khan, CEO of Bayut and head of Dubizzle Group MENA said, “Amidst the global economic slowdown and rising interest rates, we have noticed a pattern of investors worldwide turning to wealth-preserving assets.

“Dubai’s real estate sector has emerged as a standout choice in today’s economic climate, with prices and consumer interest continuing to rise even after a 24-month period of continuous growth.”

Who is buying in Dubai?

As evident from the data, there has been a notable surge in demand for both apartments and villas, accompanied by significant increases in transaction prices and volumes.

This rising trend in property prices reflects a dynamic market sentiment. Dubai’s high rental yields, easy real estate financing, and accessible residency visas are factors driving property ownership over renting.

A report by W Capital revealed that British investors were the top purchasers in Dubai’s real estate market during the first half of 2024. Other prominent nationalities included Indians, Chinese, Lebanese, Canadians, French, Italians, Dutch, Pakistanis, and Turkish buyers.

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