While property prices in Dubai continue to rise, signs indicate that the upward trend is slowing down. This has prompted some investors to sell their properties and invest the proceeds in upcoming or under-construction new developments for better returns.
It is noteworthy that buyers who purchased properties during the pandemic witnessed their properties appreciate by as much as 200%, with many of them now turning into sellers. With surging buyer demand, property sellers in Dubai currently find themselves in a favorable position.
Louis Harding, General Manager of Betterhomes, stated, "One of the primary advantages for sellers in this rapidly expanding market is the potential for handsome returns on investment, with property owners currently benefiting from favorable interest rates. Additionally, selling property in Dubai also comes with the advantage of zero property tax."
However, Mayed Alrashdi, Research Analyst at Emirates NBD Bank, believes that the Dubai real estate market may face "some adverse factors" in 2024, including sustained high interest rates, declining affordability for average households, and increased new residential supply.
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Nevertheless, the Dubai real estate market remains resilient. According to the latest industry reports, Dubai's real estate market experienced its best year ever in 2023, with transactional activity growing by 29% year-on-year, reaching 118,200 units, setting a historic high.
This also marks the first time that Dubai's real estate market transaction volume has surpassed the 100,000-unit mark. Savills, a global real estate services provider, reported that Dubai's real estate market experienced steady growth over the past year, primarily driven by an increase in the expatriate population, recent amendments to regulations governing property investors' eligibility for golden visas, and the continued growth and diversification of Dubai's overall economy.
The report stated that Dubai is currently one of the few cities globally where demand for real estate continues to grow, a growth that began after the lifting of COVID-19-related restrictions by the Dubai government.
Savills' "Dubai Real Estate Market Report 2023" stated, "In the year, 55% of sales came from off-plan... Demand has turned towards investment dominance over the year, particularly in the second half."
Apartments continue to be the largest transaction type in Dubai's real estate market, accounting for 78% of the total transactions in 2023. Furthermore, with the continued economic growth, expansion of the non-oil sectors, ongoing improvements in business facilitation policies, and government initiatives to support job creation, demand for office real estate has surged. Grade A assets are in high demand due to limited supply, leading to a decrease in vacancy rates and skyrocketing rents. Buildings located in DIFC are among the most sought-after development projects, with average rents growing by 22% annually.
Paula Walshe, Head of Transaction Services, Middle East, at Savills, stated, "Compared to other global markets, the demand for office space in Dubai still lags behind pre-pandemic averages, but the overall theme in the Dubai market for 2023 has been one of expansion and new market entry."
