More than 80% of the new property units established in Dubai since 2022 have been sold out, recalling the emirate’s invariably high demand for off-plan projects.
Dubai has seen regional and foreign developers establishing real estate projects worth hundreds of billions of dirhams since 2022. Dubai Land Department (DLD) data indicates that 148 of the approximately 214 projects started are underway.
“Much has been said about the influx of new launches and the potential dampening impact that this may have on prices, where supply may again start to outweigh demand. However, the absorption of new stock sits at markedly high levels, where our headline analysis shows at least 70% of units launched since 2022 have been sold to date,” said Taimur Khan, head of research for Middle East at CBRE.
“Due to lags in data, we anticipated that this number would be materially higher. More so, within Dubai’s core and established residential areas, this figure is, on average, well above 80%,” Khan added.
Many developers have quickly sold out of their inventory after the pandemic. Some sold out their projects within a day, while a few could make their sale in just a few hours.
Majority are owners-occupiers
Dubai’s residential market continues to showcase extreme demand levels, driven by demand from end-users and residents who want to buy their property. Most residents opt to buy to beat the red-hot rental market and high-net-worth individuals migrating to the emirate.
In May 2024, the entire volume of transactions stood at 15,766, the most increased monthly figure on record to date, marking a growth of 44.2% compared to the year prior, CBRE said.
Also, prices have overtaken the previous peaks witnessed in 2014.
According to Property Monitor, prices stand at Dh1,360 per square foot in May 2024, 10.25% higher than the previous all-time high and market peak of September 2014.
“Anecdotally, we are seeing that a considerable portion of this demand in the off-plan market is originating from owner-occupiers; therefore, in the longer term, we expect that the increase in supply will provide some relief to the rental market, but for sales prices, it is unlikely to create downward pressure,” Khan added.
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Real estate consultancy CBRE’s monthly report stated there has been a noticeable shift in market dynamics since 2019 to date, where the majority of sales transactions were previously mainly concentrated in Dubai’s core and prime residential hubs, which were historically either around Dubai’s various Central Business Districts or leisure destinations.
According to Tatiana El Bazi, senior research analyst at CBRE, the most recent data showed buyers are shifting further away from the city’s core and prime residential areas.
“This is owing to the prevailing market backdrop, vis-à-vis the lack of available and upcoming supply in these established locations, and more and more due to the now significantly higher cost associated with acquiring real estate within the neighborhoods above,” she added.
