Record Population Growth, Falling Interest Rates Boost Dubai Property Market
The volume of off-plan property registrations in Dubai reached an all-time high, with 32,968 transactions in Q3
Dubai’s property market experienced extraordinary progress in the third quarter of 2024, with record population growth and falling interest rates driving the upswing. Home sales and mortgage applications reached all-time highs, while office and warehouse prices also hit record levels.
The market continued to shift towards mid-market and affordable apartments. In fact, two out of five ready home sales were worth less than AED1 million. The average size of sold homes shrunk to its lowest level and average sales prices per square foot softened for the first time this year.
“Overall, Dubai’s property market set new records in Q3 2024, with villas outperforming apartments and significant growth across the office, hospitality and warehouse sectors,” stated Haider Tuaima, director and head of real estate research, ValuStrat.
Residential values surge
The ValuStrat Price Index (VPI) showed a 28.9 percent annual increase in residential values. Freehold villa communities exceeded 10-year price peaks, with 98 percent of villas doubling in value since 2020. Ready villa and townhouse prices also saw a 33.1 percent annual rise, while apartment values grew by 24.8 percent this quarter, up from 23.4 percent in the previous quarter. Apartment rentals also increased by 15.4 percent over the past year, significantly outpacing the 4.9 percent rise in villa rents.
Office demand robust
Demand for office space in Dubai’s property market remains robust. However, capital values experienced a more moderate quarterly growth of 2.6 percent, resulting in a 25.8 percent annual increase, sales up 3.8 percent, and rents increasing by 20.8 percent on average.
Meanwhile, logistical warehouses experienced a 14.6 percent annual increase and a 5.2 percent quarterly rise. Demand has strengthened, fueled by favorable market conditions, business expansions, and new companies entering the region.
Meanwhile, the total number of hotel keys in Dubai surpassed major cities like London, Paris, and New York and is on track to overtake Tokyo and Las Vegas. The rapid growth in tourist numbers has maintained high occupancy levels year-round.
Rent prices rise 10.7 percent
The ValuStrat Price Index (VPI) for Dubai’s property rental values grew by 2 percent quarterly and 10.7 percent annually, reaching 192.5 points. The VPI for apartments rose to 179.5 points, whilst the VPI for villas climbed to 213.2, more than double the baseline of 100 points set in Q1 2021. Meanwhile, villa rentals posted relatively modest rises of 1.6 percent quarterly and 4.9 percent annually, bringing the average yearly rent to AED414,800.
Apartment asking rents in Dubai grew 2.3 percent quarterly and 15.4 percent annually, reaching an average annual rent of AED91,100. The report also revealed that residential occupancy in Dubai was estimated at 89.8 percent.
Residential supply
As many as 98,253 apartments and 30,272 villas are currently under construction in Dubai with handovers promised by 2028. Of these projects, 11 percent are in Jumeirah Village Circle, with another 9 percent in Business Bay followed by Jumeirah Lake Towers with 5 percent.
Key off-plan apartment launches across Dubai’s property market included Verdes by Haven with 660 apartments, The Pier Residence with 274 homes, Binghatti Ghost with 770 units, One Residence with 453 properties and Mariott Residences with 138 luxury homes.
Noteworthy villa and townhouse project launches during the quarter included The Acres by Meraas with 200 properties, Wadi Villas with 30 high-end villas, and The Valley: Vindera by Emaar with 344 units.
Additional launches include Binghatti Royale in Jumeirah Village Circle, Fairmont Residences Solara Tower, Mayfair Gardens and Skyhills 2.
Off-plan property sales hit all-time high
The volume of off-plan property (Oqood) registrations in Dubai reached an all-time high, with 32,968 transactions in Q3, marking an increase of 97 percent annually and 32 percent quarterly, equivalent to investments worth AED83.2 billion.
The average ticket size of off-plan homes fell 19.8 percent annually to AED2.5 million. Meanwhile, the citywide average transacted price for off-plan properties was AED19,537 per square meter.
Dubai’s top off-plan locations transacted during the quarter included projects located in Jumeirah Village Circle at 9.2 percent, Bu Kadra at 6.2 percent and Dubai Hills Estate at 5.9 percent.
Dubai Real Estate
The Dubai real estate market is among the most in-demand and transparent in the region. It’s driven by a transparent demand-supply dynamics that has seen. In fact, the Dubai real estate market is the most transparent in the MENA region, and ranks 28th on the global real estate market transparency index in 2024. Dubai has made remarkable enhancements to digital services. Moreover, it provides easy access to land information and urban planning systems, further underscoring the emirate’s commitment to continuous improvement in real estate practices.
Dubai’s affordable real estate attracts more buyers in H2 2023
The second half (H2) of 2023 saw a substantial development in Dubai’s real estate market, with more affordable communities recording more transactions. According to recent findings from a property developer, less expensive areas like Mira and Mudon have benefitted from inflated prices in more established areas, such as Palm Jumeirah, The Lakes, Dubai Hills and Jumeirah Park.
“Sale prices in some of the more established communities have become quite elevated and when you’re comparing that with a similar size or even bigger property in a more affordable community, people are willing to sacrifice on location if they perceive the value to be greater,” said John Lyons, managing director of Espace Real Estate.
“For example, a community like Mira has seen 49 percent more transactions in H2 compared to the same period of the previous year,” he added.
Dubai’s real estate: robust overall
The new Dubai real estate report also highlights the market’s overall performance. Total property sales transactions across Dubai have risen substantially, with a combined value of AED178 billion in both off-plan and secondary markets. This marks a 47 percent increase from the same period in 2022. The off-plan market alone saw a 39 percent increase in transactions compared to 2022, and the secondary market experienced a 21 percent rise.
Interestingly, the luxury segment of the property market has still performed well. According to the report, the AED 20+ million segment saw an uptick in transactions, rising 40 percent from 2022 figures. It saw an even more substantial increase — 90 percent — when compared to the first half of 2023.
Rental performance
However, the city’s rental market depicts a different story. While the average rental price has increased across most villa and apartment communities, rental transaction volume has decreased in 25 out of the 30 communities tracked in the report. For example, Town Square posted a 27 percent decline in rental prices compared to H2 2022 figures.
This slowdown in market activity is linked to elevated rental prices, leading to fewer rental contracts and renewals. Nonetheless, there are still communities that have seen significant jumps in average rental prices. These include Jumeirah Golf Estates (90 percent), Jumeirah Islands (45 percent), and Emirates Hills (44 percent).
According to the report, “some landlords see the current market buoyancy as a good opportunity to sell, in turn reducing the amount of rental stock that is on the market.” In terms of buyer nationalities, the UK leads the list, followed by India, France, Russia and Egypt.
2025 Predictions
In 2025, Lyons predicts that there will be an increase in the valuations of traditionally affordable communities in Dubai’s real estate market.
The increasing demand for affordable communities in Dubai will likely lead to lower prices in the city’s more expensive areas. Additionally, buying property in Dubai will become easier with banks offering better mortgage rates and expected lower interest rates.
