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Dubai's property market is booming
Sep 18, 2023
Dubai's property market is booming Dubai
By   Waheed Abbas, Khaleej Times
  • City News
  • Dubai Property
  • Dubai Housing Market
  • Property Analysis
Abstract: The market share of off-plan sales has reached its highest level since the early 19th century.

New project launches in Dubai are gaining momentum as developers are increasingly looking for new buyers - both locals and foreigners. As Dubai strengthens its position as a mature and stable market with steady and high returns, these new launches are coming not only from local property developers, but also from international developers entering the local market.

According to Property Monitor, the market share of off-plan sales reached its highest level since the Covidien-19 pandemic, with investors snapping up newly launched units. The total number of sales transactions also rose by 8.1 per cent from the previous month to 12,134 units, the highest number of sales in August.

To date, 85,060 sales transactions have been recorded, an increase of 41.9 per cent over the same period last year and 125.4 per cent over the same period in 2021. 2023's monthly average transaction volume far exceeds any previous record, putting the market on track to surpass the highest annual sales record set in 2009. All of these strong figures are encouraging developers to launch new projects, as demand is promising for the foreseeable future and most developers have managed to sell out their projects within a few months. In fact, some developers claim to have sold around 30 per cent of their units even before the launch of their projects. t.

It is not only individual developers who have been making a killing over the past few quarters, large developers have also announced new major developments as the short to medium term outlook for the local property market looks quite strong.

Industry insiders expect billions of dirhams worth of projects to be launched on Palm Jumeirah itself. Among other major developers, Emaar Properties, the UAE's largest developer, launched The Oasis by Emaar, a $20bn mega-project, in June.

The Oasis covers a total area of more than 100 million square feet. It will house more than 7,000 residential units, mainly large mansions and villas on spacious plots with views of canals, lakes and parks.

Danube Properties has launched its fifth project so far this year, with the latest project, Oceanz, now available for sale after the successful sale of its previous projects - Oceanz is the developer's largest project to date. Interestingly, the company has launched 10 projects in the last 19 months alone.

Samana Developers, another private company, has also launched several projects and aims to launch 12 projects by the end of 2023.

Imran Farooq, CEO of Samana Developers, said: The new investment trend, which is also responsible for the strong demand for real estate in Dubai, is the depreciation of the US dollar - by 3.3 per cent in the first half of 2023 - which has made it more affordable for buyers from European countries whose currencies have appreciated against the dollar.

Dubai's property market is booming

Azizi Developments, another major private developer in Dubai, is also set to launch a Venetian-style waterfront project in Dubai South. The leading developer will also build the UAE's second tallest tower on Sheikh Zayed Road.

There are also a number of new international developers entering the market that are launching projects.

International property developer Mered has announced its official entry into the UAE and has chosen Dubai as its home base for designing and developing exclusive destinations. Similarly, UK-based LEOs Development and Swiss-based Fortimo have also entered the UAE market in the past year.

Fintan Flannelly, Head of Sales at Allsopp & Allsopp Developers, said that the entry of international developers has increased the supply in the property market.

These developers, both new and established, are not only executing projects locally, but also marketing to potential buyers outside of Dubai, taking advantage of the high demand for property investment in the region, Flannelly added.

Flannelly added that this is due to a number of factors, namely the proliferation of innovative off-plan solutions with flexible payment plans that make it easier to purchase a home; increased confidence in off-plan projects in Dubai due to the sound laws and regulations of the Dubai government that guarantee continued delivery; and the emergence of branded residences that add a sense of luxury and appeal.

Lewis Allsopp, CEO of Allsopp & Allsopp Group, said that Dubai has not been able to grow fast enough to meet the ongoing demand." Last year alone saw an influx of nearly 100,000 residents. To maintain this rate of growth, an additional 33,000 homes will be required by the last quarter of 2023," added Allsopp's CEO. "While Dubai's commitment to development has been demonstrated by numerous announcements this year, the typical three-year delivery period highlights the urgency of accelerating the construction of projects, particularly in high-demand areas such as Business Bay and the Jumeirah Village Circle.

The strong demand for off-plan projects reflects the fact that it is mainly investors who are buying the new units. Developers said there were also a number of residents buying off-plan flats who were looking to buy their own homes in the face of rising rents.

The launch of new developments and sales of off-plan properties have been key drivers of the magnitude of trading activity this year. According to Property Moniotor, a total of 7,085 off-plan Oqood transactions were registered in August, a significant increase of 35 per cent month-on-month and 60.6 per cent year-on-year.

Oqood, which means 'contract' in Arabic, is used to register all types of contracts between off-plan property developers and buyers.

"Speculative activity is slowly increasing as a proportion of off-plan re-sales, however, the majority of these re-sales are still skewed towards properties with an expected completion time of less than a year. Zhann Jochinke, director of market intelligence and research at Cavendish Maxwell, which publishes the Property Monitor, said that the current dampening down that is occurring in the market is likely not to last, and that more and more investors will inevitably take the risk of making what appear to be easy short-term gains.

However, he adds that one should always exercise a high degree of caution when evaluating such strategies and be aware of the risks involved, Jochinke says: The bull market won't last forever and off-plan speculation can be a dangerous game of hot potato.

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