Dubai Real Estate Market: Q1 2024 Insights
In the bustling landscape of Dubai's real estate, the market consistently delivers newsworthy narratives, from debates about supply dynamics to discussions on its vitality and direction. As a seasoned professional with 18 years in the Dubai real estate sector, I leverage a data-driven perspective to cut through the noise and provide clarity on these topics. So, let’s look at the performance of Dubai's real estate market in the first quarter of 2024 based on Dubai Land Department open data and analytics from REIDIN - Data Analytics , a real estate data platform in the UAE.
Sales Performance, Still Going Strong
Dubai’s real estate market maintained its dynamic performance into the first quarter of 2024, with transactions reaching a total value of AED 110 billion from 37,186 sales transactions. This represents a sturdy 5% increase from the previous quarter and an even more notable 20% rise from the same period last year.
Breaking down the numbers, the sales comprised of 14,654 for ready properties, while off-plan properties accounted for 22,532 transactions. Interestingly, the market for ready properties saw a slight dip of 6% from the last quarter, but still marked a 14% increase year-on-year. On the other hand, off-plan sales showed strong growth with a 14% quarter-on-quarter and 24% year-on-year increase, indicating continued high demand in the off-plan sector.
Price points have also shown impressive growth. The average price per square foot for villas climbed to AED 1,776, up 5% from the last quarter and 22% compared to last year. Apartments followed suit, with the price per square foot reaching AED 1,486, up by 6% from the previous quarter and showing a strong annual increase of 20%.
The Rising Premium on Dubai's Off-Plan Properties
In the first quarter of 2024, a continuous trend in the Dubai real estate market was the price dynamics between ready and off-plan properties. Prices for off-plan properties continued to outpace those for ready properties, with the difference growing wider. Specifically, the median sale price for off-plan properties was 13% higher than that for ready properties.
Delving into the details, the median sale price for a ready property stood at AED 1.33 million, whereas off-plan properties commanded a median price of AED 1.55 million. This difference was even more pronounced when we consider the price per square foot: for ready properties, the median was AED 1,200 per square foot, while off-plan properties reached a median of AED 1,600 per square foot, a significant 33% premium. This suggests that the demand for off-plan properties remains strong, likely influenced by a lower supply of ready properties and buyers' appetite for new developments.
Leading Areas for Sales in Q1
During the first quarter of 2024, the top areas for residential sales were Jumeirah Village Circle, Business Bay, Dubai Maritime City, Downtown Dubai, and Dubai Hills Estate. Jumeirah Village Circle, with its vast amenities, strategic location, and strong returns, remained a preferred choice for many.
The luxury segment had its own distinguished leaders, with the most premium purchases occurring in Jumeirah Bay Island, Bluewaters, Al Sufouh, Dubai Harbour, and the World Islands. It is also interesting to note that 53 properties sold over AED 50 million in this quarter alone.
On the more economical side of the spectrum, it's noteworthy that 30% of the properties sold were priced below AED 1 million, indicating a healthy market offering options for a range of budgets.
Rentals Market Continues Strong with Renewals
The rental market in Dubai remained robust in the first quarter of 2024, with an obvious trend towards lease renewals. Out of the 159,940 rental contracts executed during this period, renewals made up a substantial 64%, translating to 102,348 contracts. In contrast, new contracts comprised 36%, totaling 57,592. This period saw a slight decrease in new contracts by 4%, while renewals saw a 5% increase compared to the previous quarter.
This preference for renewing existing leases over securing new ones was reflected in pricing. New rental agreements commanded a 9% premium in price per square foot, averaging at AED 135, compared to AED 123 for renewed contracts. Annually, new contracts were also costlier, with a median of AED 60,000, which was 13% higher than the AED 53,000 median for renewals.
When looking at the average price per square foot in rentals in Q1, apartments stood at AED 111 price per square foot while villas were AED 98 price per square foot. In Q1, apartment prices increased by 22% year-on-year, while villas increased by 15% year-on-year.
With the recent update of the RERA rental index calculator on March 1st this year, it will be interesting to see the future trend of rental renewals vs new rental contracts. With the update aligning future renewals more closely with current market rents, the appeal of renewals may undergo a shift compared to their attractiveness before the update.
Focusing on area preferences, International City, JVC, Silicon Oasis, Business Bay, and Dubai Marina were the top picks for renters in Q1 2024.
The luxury rental market painted a different picture, with MBR City, Downtown Dubai, Meydan One, Sobha Hartland, and Dubai Hills Estate being the most expensive areas to rent. Meanwhile, the most budget-friendly areas included Cedre Villas, Damac Hills 2, International City, Mirdif, and Liwan, offering more accessible options for residents.
Supply Dynamics and Post-Handover Payment Plans
The topic of supply within Dubai's real estate market remains ever-present, with notable developments in the first quarter of 2024 suggesting that the market is adjusting to demand. During this quarter, Dubai saw the completion of 6,526 residential units, with leading contributions from Emaar, Azizi, and Me Do Re Properties, particularly in areas such as Meydan One, Jumeirah Village Circle, and Al Furjan.
Looking ahead at the rest of 2024, projections from Reidin indicate that about 33,000 units are set to be finalized. This figure includes 23,000 apartments, 9,000 villas, and 1,000 serviced apartments.
The top areas where units are being constructed, set to complete in 2024, are District Seven, Meydan One, Jumeirah Village Circle, Downtown Dubai and Al Furjan.
It is important to note that supply figures are not static and subject to frequent change. Factors such as construction progress, regulatory approvals, and the timing of project completions and handovers all play a significant role in shaping the supply landscape.
The resurgence of post-handover payment plans reflects a recalibrated market. In 2020, such plans were available for approximately 43% of projects, but this trend declined significantly over the years due to the increased demand in off-plan and low supply post covid. However now, around 30% of the construction projects scheduled for completion by 2026 are reintroducing these payment plans, reflecting the increased supply and a wave of new off-plan property launches.
Demand for off-plan properties remains strong, as they constituted 61% of the quarter's sales. With both supply and demand surging, alongside growing population figures and inflationary pressures, it will be interesting to observe how the off-plan market adjusts and evolves in the upcoming periods.
As the first quarter of 2024 came to an end, Dubai's population reached a new milestone of 3.68 million residents, an increase of 25,776 from the beginning of the year. This steady growth, observed since January 2021, equates to an average monthly increase of 6,900 residents, accumulating in a significant total rise of 269,300 people.
The Dubai Department of Economy and Tourism also reported that the city welcomed 3.67 million overnight visitors in just the first two months of 2024. This sustained influx of residents and visitors alike is a testament to the allure of Dubai's dynamic environment, strengthened by its appealing visa policies, such as the golden and investor visas, which continue to draw people from around the globe.
This steady demographic expansion has far-reaching implications for the real estate market. The increasing population directly correlates to increased demand for residential and commercial properties, presenting a plethora of opportunities for property investors. Despite the increase in property prices, Dubai's market remains competitive on a global scale.
It is also noteworthy that the previously observed rapid population growth has begun to slow down and the real estate sector reflects this change. Influenced by various factors, including a slower migration rate from countries such as Russia and other former Soviet states, as well as geopolitical tensions and broader macroeconomic considerations.
For real estate investors, this evolving landscape underscores the need for strategic, data backed investment planning and reliance on robust market research. Staying abreast of these changes is crucial for capitalizing on investment opportunities as they arise. As Dubai continues to grow and adapt, informed and data backed strategic decisions will be key to leveraging the potential of the city's real estate sector.
