According to an analysis by Espace Real Estate, Dubai real estate has seen a 26 percent increase in residential real estate values this year.
Strong Start to 2024
A Q1 market summary report issued by Espace Real Estate investigated sales and rental activity in Dubai’s townhouse, villa, and apartment markets during the first three months of 2024.
The report tracks 30 communities and concentrates solely on the residential sector. It displays a solid start to the year for the real estate agency.
Dubai Real Estate
With a significant increase in total sales transaction value (+26 percent) and transaction volume (+22 percent) in both the off-plan and secondary markets compared to this time last year, there is optimism about the rest of 2024.
Strong Start to 2024
However, despite the solid 12-month growth rate compared to the previous quarter (Q4 2023), there is evidence to suggest that the secondary market in Dubai is finally leveling out to a more realistic and sustainable level of activity, with an 11 percent decrease in transaction values compared to the previous quarter (Q4 2023).
This results from fewer properties transacting above the AED10m ($2.7m) price point on a Quarter-on-quarter (QoQ) basis compared to a hugely buoyant Q4 2023.
In contrast, the sub-AED10 m ($2.7m) price bracket continues to experience quarterly transaction volume growth.
Experts’ Insights
John Lyons, Managing Director of Espace Real Estate, said: “While there is an overall increase in activity, the secondary market is showing signs, particularly in the AED10m+ ($2.7m+) price point, that it will not continue to accelerate on the same trajectory as it has been.
“Quarter-on-quarter data tells us things will stabilize, and the secondary market will continue to transact, but at levels that will likely see more modest market growth than the steep upward trajectory we have seen over the past five years.
“In other words, the more expensive end of the market is flattening out.“
Read More: The DAMAC Hills 2 Community emerges as one of the UAE’s most transacted properties
Community-Specific Trends
At a community-specific level, average prices in Dubai have increased in all 30 communities tracked in the report except Emaar Beachfront and Jumeirah Golf Estates.
The communities with the highest average sale price during Q1 were Jumeirah Islands (49 percent), The Lakes (44 percent), and Jumeirah Park (44 percent).
So, are Dubai’s Jumeirah Golf Estates losing value or leveling out? John Lyons explains: “It is important to note that Jumeirah Golf Estates has not experienced a decline in value.
“There has been a surge in transaction activity for the lower price point townhouse sector, which represents 44 percent of total transaction volume in Jumeirah Golf Estates in Q1 2024, up from 13 percent in 2023.
“To put it simply, there has been an influx of new townhouse transactions in the community, bringing the average sales price data down.”
“Then, if we look at the case of Jumeirah Park, which shows a 44 percent increase in value, although a reduction in volume, we can put this down to the price gap narrowing with comparable local communities such as The Meadows which in Q1 2023 was 20 percent more than Jumeirah Park, but in Q1 2024 is just 11 percent more.“
Seller Sentiment and Buyer Nationalities
Report facts additionally show an 8% decrease in percentage-ductions compared to the same duration last year, which indicates that charge ambition degrees are still high, with high-quality sentiment among Dubai sellers.
Regarding nationalities, the United Kingdom and India retain to pinnacle of the listing for Espace Real Estate, while Russia does not function in the top ten, starkly contrasting to Q1 2023.
Lebanon now ranks 3rd within the listing of client nationalities, with the Netherlands and Canada coming in at fourth and 5th, respectively.
Impact of New Developments
John Lyons defines the influence on the secondary market as new developments in established communities entering the market.
“If we look at Palm Jumeirah, for example, there has been a -53 percent decrease in the number of transactions in the secondary villa/townhouse market (albeit average prices are +14 percent higher).
“This is because, as the area sees more developers launching brand new collections of villas and townhouses onto the market, more people are buying off-plan rather than going for older builds.
“For the coming months, I anticipate that as the off-plan market continues to make lots of great options available, we will see slightly more sustainable activity levels in the secondary market.“
Rental Market Trends
Average Dubai rental prices continued to soar across every community tracked, with significant uplifts year on year in Palm Jumeirah’s villa/townhouses (+63 percent YoY) and Bluewaters Island apartments (+64 percent).
Popular areas for villa/townhouse living have also experienced an uplift in rent prices, such as The Meadows (+35 percent), Dubai Hills (+36 percent), and Jumeirah Islands (+29 percent).
However, new rental contracts and renewals have declined across most Dubai communities, and the number of transactions is down.
Shift from Renting to Buying
John Lyons, Managing Director of Espace Real Estate, explains: “At Espace Real Estate, we have seen a trend of tenants becoming homeowners over the last 12 months due to very high rental prices and a more affordable mortgage market.
“When people are faced with the decision whether to renew their contract, they are looking at the exorbitant cost of rent versus the cost of ownership.
“Mortgage products are much lower than they once were, and relaxed visa regulations make buying their own home easier.
“With the population continuing to grow and many people setting up homes in the region, we have seen significant increases in mortgage leads and buyer registrations over the last quarter.“
