Dubai currently has more than 297,000 residential units under construction. This represents 55% of the existing residential property supply. According to Real Trust UAE's Q2 2024 report, this large number of new units will have a major impact on the market in the coming years.
KEY AREAS OF GROWTH IN DUBAI REAL ESTATE
Several popular residential areas will see large changes due to new construction. Jumeirah Village Circle (JVC), where prices have more than doubled recently, will receive around 30,000 new units. This addition is equal to 80% of its current housing stock. The influx of new homes should balance the area's market dynamics.
Business Bay, known for high demand and rising prices, will add about 20,000 new units. Dubai South, boosted by the announcement of a new airport, is set to get 14,000 new homes.
These additions will impact market positioning and supply-demand dynamics. The changes could lead to price adjustments in both sales and rental markets over the next few years.
DUBAI REAL ESTATE MARKET INSIGHTS DURING Q2 2024
The Real Trust UAE report highlighted several key indicators for the Dubai real estate market in Q2 2024. Since September last year, median residential listing prices have declined by an average of 5% per month. This shift signals a move from a seller’s market to a buyer’s market. Additionally, the average number of days a property stays on the market increased from 30 days last year to over 90 days.
SALES AND TRANSACTIONS IN DUBAI REAL ESTATE
The secondary, or ready, market showed signs of slowing down. There was a 2.9% decline in residential sales transaction volume in Q2 compared to the previous quarter. This marked the second consecutive quarter of decline in this segment. Yet, the median sales price for secondary transactions in Q2 was AED 1.4 million, showing a 5% increase from Q1.
DUBAI'S OFF-PLAN MARKET ACTIVITY
The off-plan market remained active, with 78,361 new units launched in 2024 so far. Off-plan sales transactions in Q2 increased by 18% quarter-on-quarter and 64% year-on-year. Despite this, the median off-plan sales price in Q2 was AED 1.54 million. This reflects a slight 0.6% decline from Q1, marking the second consecutive quarter of decline.
STRATEGIES OF REAL ESTATE DEVELOPERS
Real estate developers are adapting to changing market conditions. They offer more competitive products through incentives and discounts. They also provide extended post-handover payment plans. This year, 34% of new projects feature these payment plans, which range from 12 to 120 months.
DUBAI'S POPULATION GROWTH AND MARKET EVOLUTION
Dubai's population continues to grow, with 25,776 new residents in Q1 2024, bringing the total to 3,680,785. This population growth will continue impacting the real estate market.
REASONS FOR EUROPEAN INVESTMENT IN DUBAI
European investors find Dubai real estate attractive for several reasons. The low tax rates, luxurious lifestyle, cheaper property prices, higher returns, ease of doing business, political stability, and safety all contribute to this appeal. Additionally, the UAE residential market offers higher yields compared to Europe, with returns up to 8%.
DUBAI INVESTMENT TRENDS
Investors from Europe focus on high-end residential properties in areas like Downtown Dubai, Dubai Marina, and Palm Jumeirah. These high-end investments range from Dh 4 million to Dh 80 million or more. Pure investors like these usually invest between $0.5 million to $2 million. They often prefer good payment plans, which make it easier to pay for the property.
REAL ESTATE IN DUBAI CONTINUES THRIVING
Dubai remains an attractive location for buying property and starting a business. New residential units are increasing, and Dubai's population continues to grow. These factors are shaping the future of the UAE residential market. So, with major developments underway, Dubai's real estate market will see notable changes in the coming years.
