Experts predict that the DUBAI real estate market will continue to expand this year after having a fantastic first quarter due to the emirate’s home buyers continuing to pour money into the market.
Recent data shows that during the January–March 2024 quarter, the residential market in the emirate saw strong double-digit growth in both transaction volume and value, demonstrating its continued appeal.
The market, which is expected to post over Dh100 billion in sales through more than 30,000 transactions in the first quarter, will sustain steady price and transaction increases throughout the year due to strong demand and a gradual increase in the emirate’s population in the upcoming years.
Residential prices in the emirate rose sharply in the first two months of 2024, rising from Dh55 billion to Dh72 billion, or 30.91 percent, year over year. In January through February of 2024, there were 22,900 transactions in the emirate, up from 18,083 in the same months the year before. This represents a 26.6% increase in transactions year over year.
According to industry participants, the Dubai real estate market has shown itself to be flexible and resilient in spite of challenging global economic conditions. They stated that the outlook for the Dubai real estate market is one of cautious optimism, driven by government initiatives and infrastructure developments.
Nadia Zahid, a property consultant at Xperience Realty, stated that the Dubai real estate market appears to have a promising future following a robust start in 2024.
“With significant launches from various developers such Emaar, Nakheel, garnering attention, coupled with a robust demand for off-plan properties, the market shows resilience,” Nadia told BTR. She said government initiatives such as Economic Agenda D33 and Vision 2040 contribute to investor confidence, signaling long-term growth potential.
The speaker additionally mentioned that investors are still drawn to Dubai South due to its strategic positioning as a global business hub and the infrastructure developments in the area.
“Despite potential challenges, including global economic fluctuations and geopolitical uncertainties, Dubai’s real estate market is poised to sustain its upward trend, offering lucrative opportunities for both local and international investors seeking stable returns in a dynamic market landscape,” she said.
World’s Foremost Geography
Chief Executive and Asset Manager of DHF Capital Bas Kooijman says the United Arab Emirates is becoming one of the world’s best places to diversify your real estate holdings.
Regarding the latest data, which shows that investment in Dubai’s real estate market reached $100 billion in 2023 and is predicted to increase by 5% this year, he said that the topography of the emirate presents a unique and enticing opportunity for people searching for a variety of real estate options.
“High rental income potential, paired with impressive growth projections, makes Dubai a strategic choice to build resilient and diversified portfolios. With developers launching projects at an unprecedented pace, investing in desirable locations and futuristic builds can offer both short and long-term gains,” Kooijman opined.
A Catalyst for Growth
Realiste, a specialized prop-tech company providing real estate investment solutions, projects a 15% growth in Dubai’s real estate market this year.
According to Alex Galt, CEO and founder of Realiste, Dubai’s appeal in areas like safety, cleanliness, tourism, and general quality is what will fuel the city’s anticipated rise to prominence in the global real estate market by 2024.
“In 2024, Dubai’s real estate market is poised for significant growth, estimated at approximately 15 percent, driven by robust demand, a thriving economy, and heightened foreign investor interest,” according to Realiste.
Certain parts of Dubai, like Business Bay Second and Palm Jumeirah, have also been identified by Realiste’s AI analysis as having significant price increases in 2024. The attractiveness of real estate investments in these areas is increased by these findings. This study will also be a helpful resource for stakeholders and investors seeking information on the shifting dynamics of the global real estate market.
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As evidence of the city’s ongoing rapid population growth, the real estate consulting firm Cushman & Wakefield Core stated in its annual report that Dubai will welcome 100,240 new citizens in 2023.
Citing data from the Dubai Statistics Centre and the 2040 Dubai Urban Master Plan, the real estate consultancy projects that by 2040, there will be 5.8 million people living in the emirate, up from 3.65 million at the current population. “That reflects an increase of over 2.15 million residents in the next 17 years. With an approximate household size of 4.2, Dubai would need nearly 30,000 residential units consistently every year until 2040 to cater to this growing population,” according to the report.
The report states that enrolment in Dubai increased by 12% in 2023. There was an additional 39,000 enrolment in private schools, indicating a potential increase in demand from younger families.
Nothing to Contradict
According to Prathyusha Gurrapu, Head of Research & Consulting at Cushman & Wakefield Core, the fundamental sentiments in the residential market are rising prices, rising rents, and the launch of new projects.
“While the pace has started to moderate over the fourth quarter of 2023, we don’t see any signs of contractions in the market yet,” Gurrapu said.
She said affordability is a growing concern for the low to mid-market segment. “Although we don’t foresee the sharp rises witnessed in 2023 to continue in 2024, we believe the market will see rises at sustainable levels,” she said. “With very limited post-handover payment plans now seen in the off-plan market, and the potential lowering of the interest rates later in 2024, these are expected to support the secondary sales market and help moderate sales price increases,” she added.
According to Will McKintosh, Regional Partner and Head of Prime Residential for Mena at Knight Frank, the residential market in Dubai is no longer growing. It has surfaced.
“The nature of buyers in the market is testament to this shift, as is the type of real estate being developed in the city, much of which would not look out of place in other global cities,” he said.
He added that in addition to attracting foreign buyers of second homes, the emirate’s unparalleled lifestyle options in one of the safest locations on earth are driving the development of highly sought-after neighborhoods away from the lavish beachfront mansions. Additionally, people are settling down in the city and remaining there for longer.
“For instance, we found a balance in Jumeirah Islands, which offered both in terms of tranquil lake views, newly renovated contemporary style homes & convenient access to local amenities,” he said.
CBRE Group, a Fortune 500 and S&P 500 company, has also voiced confidence in the Dubai real estate market and thinks that high demand will sustain the residential market’s continued success in the United Arab Emirates.
“Looking ahead, price growth in both Dubai’s apartment and villa segments of the market are likely to remain relatively strong; however, we do expect that the rate of price growth will taper off. In the rental market, on the back of the prevailing market fundamentals, the lack of supply, and heightened demand levels, we expect that residential rents in Dubai will maintain their upward trajectory; that being said, the rate of growth will likely moderate further,” according to CBRE report on the UAE residential market.
According to Taimur Khan, Head of Research at CBRE, the residential market in the United Arab Emirates finished the year strongly, driven by high demand.
“The robust levels of activity, high levels of absorption, which have reduced available supply, will continue to support price growth in both Abu Dhabi and Dubai in the year ahead,” he said.
“In terms of rental growth, we expect that rental rates in Abu Dhabi will continue to rise, with prime areas set to outperform the market. In Dubai, we expect that rental growth will continue to moderate, however, still remain positive in 2024,” he added.
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