Dubai Real Estate through its innovative real estate projects has been attracting global attention for its remarkable performance and resilience in the face of the Covid-19 pandemic and other external challenges. The market has witnessed strong growth in both off-plan and ready properties, driven by pent-up demand from travelers, increased spending by residents, and favorable regulatory frameworks. However, questions remain about the sustainability and growth trajectory of the market. Is it in a bubble? Will the growth continue? What are the potential future threats and opportunities ahead?
In this article, we will analyze the value, volume, and median price per square foot for residential apartments in Dubai from 2009 to 2023, based on extensive data from DXBinteract.com, a leading online platform for Dubai real estate information and transactions.
Key Trends:
Sales Value: Off-Plan vs. Ready Properties:
Off-Plan Properties:
Off-plan sales value increased from AED 47 billion in 2009 to AED 83 billion in 2023, marking a 76% increase over 13 years, or an average yearly increase of 5.8%.
Ready Properties:
Ready sales value escalated dramatically from AED 4.4 billion to AED 42 billion, indicating an 854% increase over 13 years, or a staggering 65% average annual increase.
Takeaways:
Sustainable Ready Market: The 854% growth in ready properties over 13 years indicates a mature and sustainable market, supported by robust end-user demand and resale activity.
Healthy End-User Demand: There has been a moderate yet positive growth rate of 0.6% in the number of sales transactions for ready properties over the past 13 years, indicating a stable demand from end-users who seek to own or rent properties in Dubai.
Off-Plan Market Dynamics: The slower yearly growth rate in off-plan sales can be attributed to a lack of new launches between 2010 and 2012 and a softer market from 2015 until 2020. However, a robust increase in off-plan projects has been observed since 2021.
Sales Volume:
Off-Plan Properties:
Sales volume went from 35,800 in 2009 to 36,600 in 2023, surpassing the previous peak set in 2009.
Ready Properties:
Sales volume rose from 17,300 in 2009 to 25,700 in 2023, indicating an 8.4% growth over 13 years or a 0.6% average yearly increase.
Takeaways:
Robust Off-Plan Demand: Despite surpassing pre-crisis levels, demand remains strong for off-plan properties, as buyers are attracted by lower prices, longer payment plans, and higher returns.
Diverse Developer Participation: Off-plan sales have increased, but the share of transactions is now spread across a greater number of developers and projects, creating more diversity and competition in the market.
Sustainable Growth in Ready Market Sales: A steady uptick in sales volume indicates a mature and sustainable market for ready properties.
Future Demand: As long as demand for ready properties exists, off-plan projects will continue to attract buyers who seek to invest in Dubai’s future.
Risks and Opportunities:
Potential Threats:
Supply Surge: A rapid influx of off-plan projects could intensify competition among developers, leading to longer payment plans or decreased prices. This could affect the profitability and cash flow of developers and investors alike.
Investor Expectations: Those who own under-construction properties anticipate high profits upon completion, hinging on original purchase prices and continuous market growth. However, if market conditions change or supply exceeds demand, investors may face losses or difficulties in selling their properties.
Market Price Discrepancy:
There is an emerging gap between developer prices and resale market prices for both off-plan and ready properties.
Median Price Per Square Foot:
For off-plan properties, the price rose from AED 1,004/sqft in 2012 to AED 1,825/sqft in 2023 (81% increase, 7.4% per year).
For ready properties, the price increased from AED 858/sqft in 2012 to AED 1,136/sqft in 2023 (32% increase, 2.9% per year).
Takeaways:
Luxury Market Influence: The spike in off-plan prices can be attributed to the proliferation of luxury projects.
Healthy Price Trends: Given the external conditions, an annual increase of 7.4% for off-plan and 2.9% for ready properties seems reasonable.
Conclusion:
Dubai’s real estate market has shown strong growth and emerging opportunities in 2023, driven by pent-up demand from travelers, increased spending by residents, and favorable regulatory frameworks. The market has witnessed robust demand for both off-plan and ready properties, reflecting a diverse and mature market. However, there are also potential threats that could affect market performance, such as supply surges, investor expectations, and market price discrepancies. Therefore, it is important for buyers, sellers, developers, and investors to be aware of the market trends, risks, and opportunities, and make informed decisions based on data and analysis.
Some of the key data points that should be considered are:
The ratio of secondary sales of off-plan units dropped from 34% in 2022 to 15% in 2023, which shows that many owners of properties under construction resold during 2022 as their entry prices were lower, hence they cashed out their profit.
The supply of new off-plan projects has risen, leading to a dominant marketing of primary sales by real estate developers and a slowdown in the resale market for properties under construction.
Investors have shifted their attention to buying from developers rather than in the secondary market, which also contributed to the rise of primary market transactions.
While the Dubai real estate market shows signs of robust growth and sustainability, potential risks stemming from oversupply and investor expectations must not be overlooked. The data suggests a predominantly healthy market, driven by end-user demand, but continuous monitoring and prudent decision-making will be key to navigating the future landscape.
Dubai Real Estate through its innovative real estate projects has been attracting global attention for its remarkable performance and resilience in the face of the Covid-19 pandemic and other external challenges. The market has witnessed strong growth in both off-plan and ready properties, driven by pent-up demand from travelers, increased spending by residents, and favorable regulatory frameworks. However, questions remain about the sustainability and growth trajectory of the market. Is it in a bubble? Will the growth continue? What are the potential future threats and opportunities ahead?
In this article, we will analyze the value, volume, and median price per square foot for residential apartments in Dubai from 2009 to 2023, based on extensive data from DXBinteract.com, a leading online platform for Dubai real estate information and transactions.
Key Trends:
Sales Value: Off-Plan vs. Ready Properties:
Off-Plan Properties:
Ready Properties:
Takeaways:
Sales Volume:
Off-Plan Properties:
Ready Properties:
Takeaways:
Risks and Opportunities:
Potential Threats:
Market Price Discrepancy:
Median Price Per Square Foot:
Takeaways:
Conclusion:
Dubai’s real estate market has shown strong growth and emerging opportunities in 2023, driven by pent-up demand from travelers, increased spending by residents, and favorable regulatory frameworks. The market has witnessed robust demand for both off-plan and ready properties, reflecting a diverse and mature market. However, there are also potential threats that could affect market performance, such as supply surges, investor expectations, and market price discrepancies. Therefore, it is important for buyers, sellers, developers, and investors to be aware of the market trends, risks, and opportunities, and make informed decisions based on data and analysis.
Some of the key data points that should be considered are:
While the Dubai real estate market shows signs of robust growth and sustainability, potential risks stemming from oversupply and investor expectations must not be overlooked. The data suggests a predominantly healthy market, driven by end-user demand, but continuous monitoring and prudent decision-making will be key to navigating the future landscape.