Signs of Maturity in Dubai’s Real Estate Market

As more information becomes available, the maturity levels of Dubai’s thriving real estate market become more apparent. According to a recent study, in the third quarter, two out of every five ready-to-move-in home sales had values below Dh1 million.

At 190.1 points, the ValuStrat Price Index, which measures residential capital values, increased 6.7% on a quarterly basis and 28.9% on an annual basis. The baseline of 100 points set in Q1 2021 serves as the benchmark for this valuation-based index.

Ninety-eight percent of homes in Dubai’s freehold villa communities have doubled in value since the pandemic in 2020–2021, surpassing the price peaks of a decade ago. Except those on Palm Jumeirah, apartments, which make up more than 80% of Dubai’s housing stock, have not yet achieved these milestones.

Capital values reached 243.2 VPI points, indicating a slightly slower annual increase of 33.1 percent and quarterly growth of 7.4 percent, demonstrating the ready villa market’s continued strong momentum. Palm Jumeirah (42.8 percent), Jumeirah Islands (42.3 percent), and Emirates Hills (33.8 percent) were the top annual performers, while Mudon (20.4 percent) and Jumeirah Village Triangle (20 percent) saw the lowest gains.

From 23.4% in the previous quarter to 24.8% in the third, apartment values rose yearly. While Jumeirah Beach Residence (17.6%), Dubai Sports City (17.8%), and International City (18.1%) exhibited the slowest gains, Discovery Gardens (33.5%), The Greens (33%), Palm Jumeirah (30.9%), Al Quoz Fourth (29.5%), and Town Square (28.6%) led the annual growth.

At a record high of 197.8 points, the valuations of highly sought-after prime properties—known for their outstanding views, amenities, facilities, and layouts—rose by 30.7% annually and 7.3% quarterly. This growth is evaluated about a 100-point baseline set in the first quarter of 2021.

All of the monitored villa communities exceeded their 2014 highs, and the prime villa market reached 248.8 points with capital gains of 38.1 percent annually and 8.3 percent quarterly.

The capital values of Dubai’s luxury apartments grew at an accelerated rate, rising 24.7 percent year over year and 6.5 percent since the second quarter to reach 166.6 points. The first neighborhood to see apartment prices surpass the 2014 highs was Palm Jumeirah.

An estimated 35,524 new construction units are expected to hit the market this year. As of the first nine months of 2024, 13,217 apartments and 3,751 villas were estimated to have been completed, which accounted for 48% of the initial projections.

30,272 villas and 98,253 apartments are presently being built, with completion anticipated in 2028. Eleven percent of these projects are in Jumeirah Village Circle, nine percent are in Business Bay, and five percent are in Jumeirah Lake Towers.

With 32,968 transactions recorded during the quarter, the volume of off-plan (Oqood) registrations hit an all-time high. This represents a 97% YoY and 32% QoQ increase, translating into investments totaling Dh83.2 billion. According to ValuStrat data, the average ticket size of off-plan homes decreased by 19.8% per year to Dh2.5 million. Off-plan properties sold for an average of Dh19,537 per square meter (Dh1,815 per square foot) across the city.

According to data, 12,883 ready secondary home transactions occurred in the third quarter, representing investments totaling Dh29.8 billion, an increase of 11.9% from the previous quarter and 19.4% from the previous year.

At Dh2.3 million, the average ticket size for ready properties decreased 9.2% every quarter but stayed constant on an annual basis. Forty-one percent of all ready-to-move-in home sales had prices under Dh1 million.

In terms of luxury, 53 homes valued at more than Dh30 million were sold, up from 62 during the same time last year. According to ValuStrat data, the average transacted price for ready units across the city during the quarter was Dh15,414 per square meter (Dh1,432 per square foot), which was up 7.1% year over year but down 5.5% on a quarterly basis.

In the third quarter, 95.4 square meters (1,027 square feet) of apartments were sold on average. 294.9 square meters (3,174 square feet) was the average size of a villa.

The areas with the highest transaction rates for available properties were Dubai Marina (5.6%), Business Bay (5.6%), and Jumeirah Village Circle (9.1%).

10,118 mortgage transactions across all asset classes and 14,977 cash transactions of ready-to-move-in properties were recorded in the Dubai real estate market during the third quarter of 2024. Cash transactions totaled Dh28 billion, while mortgage transactions accounted for Dh19 billion of the total sales value.

“The market continued to shift towards mid-market and affordable apartments. 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. Dubai’s property market experienced extraordinary progress in Q3 2024, with record population growth and falling interest rates driving the upswing. 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,” said Haider Tuaima, director and head of real estate research, ValuStrat.