17 January 2024, Middle East Economy
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.
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.
In 2024, 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.