Dubai’s real estate market has stabilized following significant price increases in off-plan properties during 2023, according to a report by Better Homes.
The market witnessed a spike in off-plan property prices over the last year, driven by high demand and limited supply in critical areas.
Prices in high-demand locations such as Dubai Hills Estate, Business Bay, and Jumeirah Village Circle surged 15-30 percent compared to the previous year.
Investors shift focus to ready properties in Dubai
The report said that popular luxury developments in Downtown Dubai and Palm Jumeirah also saw sharp increases as investors sought to capitalize on potential capital appreciation during construction.
Better homes were there to witness this explosion in activity, noting a rise in activity as investors poured into the expanding market, drawn by Dubai’s robust economy and booming real estate industry.
Recent data shows a slight decline in average prices. The average price per square foot for off-plan sales in August 2024 reached AED1,866, a 4.2% decline from AED1,948 in August 2023.
This moderation results from a natural balancing process following the 2023 price boom fueled by a rise in new project launches and supply, which reduced price pressure.
As 2024 approaches its final quarter, the market has shown resilience and signs of stabilization with consistent month-over-month growth, the report said. It added that the current trend of lower off-plan prices doesn’t signal a weakening market but rather a healthy recalibration toward price equilibrium.
An important factor contributing to this change is investors’ increasing demand for residences that are ready to move into.
In Q1 2024, ready properties accounted for 54% of all transactions, compared to 46% for off-plan, marking a significant shift in investor priorities.
As construction nears completion, more buyers are seeking instant returns in the form of rental revenue or occupancy.
The number of transactions involving existing properties increased by 30% in Q1 2024 compared to the same period in 2023, indicating a growing need for ready-to-move-in residences.
Meanwhile, the off-plan market maintained stability with a modest 5% increase in transaction value, indicating that while still appealing, it is no longer the primary focus for many investors seeking quicker returns.
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The supply of new developments has also offset the minor decline in off-plan prices, especially following the ambitious launch schedule of 2023.
Developers are facing increased competition. Thus, pricing techniques are being modified to stay competitive. Investors prefer the security of ready-to-move-in residences over the risks associated with off-plan projects, such as construction delays or market fluctuations, as they become increasingly risk averse.
“At Betterhomes, we continue to track these market dynamics closely. Our strategy for 2024 focuses on helping investors navigate both the off-plan and ready property segments by offering expert guidance on where the best opportunities lie. Whether it’s in emerging off-plan developments or established ready homes offering immediate returns, we’re positioned to provide valuable insight and support,” the report said.
