28 December 2023, BNN
As Dubai’s real estate market basks in a record-breaking year, analysts speculate a potential shift in trajectory as we approach 2024. This shift is anticipated due to the presumption that purchasing power may soon reach its limits, causing a trend towards smaller and more affordable properties.
The narrative of Egyptian couple, Dina Habib and Karim Yusuf, who are currently seeking to sell their first property in Dubai’s Jumeirah Village Circle district at a 26% profit, encapsulates the current momentum of Dubai’s property market. They aim to reinvest in a larger property, hoping to secure more space for their family at the same or lesser cost.
A Robust Surge with a Potential Slowdown
Dubai’s real estate market has achieved a significant milestone, with property prices surging to an all-time high, surpassing the previous peak recorded in September 2014. The city added 100,000 new residents in 2023, while only 50,000 new properties were handed over in 2022.
This imbalance has created a shortage of residential units, pushing prices upwards. In the first 11 months of this year, 122,657 sales transactions were recorded, marking a 40.3% increase compared to the same period last year. However, despite this robust surge, analysts predict a potential slowdown in 2024 due to limits of purchasing power and a trending preference for smaller properties.
Competition and Demand: the Current State of Dubai’s Real Estate
With property prices reaching an all-time high of Dh1,271 per square foot, many owners and investors are opting for ‘flipping,’ a strategy of remodeling and selling properties at higher rates. The current market exhibits a 15% gap between average seller sales listing prices and transferred property sales prices.
High prices in popular and central locations have resulted in a migration to new and upcoming areas that are still more affordable. These factors, along with the completion of notable projects like Azizi Developments’ Pearl project in Dubai’s Al Furjan, which is now 80% complete and due to be completed by the end of Q1 2024, underpin the competitive nature of Dubai’s real estate market.
The Future of Real Estate in Dubai
The future of Dubai’s real estate market remains strong, with new units expected to enter the market next year. Demand is anticipated to outstrip supply, supporting prices. The largest investors, according to Sobha Realty, are expected to come from Latin America, Mexico, and Canada, contributing to the growing demand for property in Dubai. Despite the potential for a slowdown, industry executives predict that property prices in Dubai will continue to rise in 2024, albeit at a slower and steadier pace. Yet, even with the rise, property prices in Dubai remain relatively more affordable when compared to global cities such as London, Paris, New York, and Hong Kong.