Prathyusha Gurrapu, Director of Research and Consultancy at Cushman & Wakefield Core, stated, "Due to sustained demand and positive market sentiment, we expect prices to continue to rise steadily by 5-10% by 2024. While the rate of increase may slow compared to the 20-25% in 2023, we anticipate that prices will maintain an upward trend."
Gurrapu expects that waterfront areas such as Jumeirah Palm Island, Jumeirah Bay, and downtown Dubai, along with projects with significant deliveries, such as Dubai Parks and Mohammed Bin Rashid City, will see relatively higher price increases next year.
Since Q2 2021, property prices in Dubai and Abu Dhabi have risen by approximately 15%, according to Moody's Investor Services. The real estate market in the UAE is expected to remain healthy for the next 12-18 months, but the pace of demand growth may slightly slow down.
The Dubai government continues to work towards enhancing the city's attractiveness to investors, tourists, and residents. This will support positive market sentiment, create job opportunities, and promote population growth across income levels.
Dubai, as a global financial center with a strong socioeconomic status, is expected to continue attracting global investors. Developers will introduce new products to meet the growing demand, stimulating high-value transactions. The overall transaction volume is expected to remain stable due to strong demand from cash buyers and investors.
Over the past decade, the Dubai real estate market has attracted two types of buyers. The first is UAE residents, but their purchasing power has decreased with rising property prices, inflation, and interest rates. The second type is high-net-worth buyers or millionaires, who continue to support off-plan demand. Most of them are cash buyers, making them less sensitive to inflationary pressures and interest rate hikes compared to mortgage-dependent buyers.
For instance, Moody's data indicates that nearly 60% of the total sales value for prime properties in 2022 targeted non-UAE residents, with most being cash buyers. On the other hand, UAE buyers accounted for a significant portion of sales from Abu Dhabi's Aldar development and more than half of the sales from Dubai's Emaar Properties.
Residential developers in the UAE will continue to launch new projects to meet robust market demand. The addition of new supply is steadily increasing, with approximately 80,000 new homes expected.
According to data from real estate data companies Reidin and JLL, there is a significant number of residential projects currently under construction in Dubai and Abu Dhabi.
Moody's anticipates that the profit margins of residential developers will improve in the next 12 to 18 months.
Moody's stated, "Over the past 18 months, many developers have launched new projects, and off-plan sales have surged as a result. This has led to a significant increase in developers' backlog revenue." The introduction of new projects and increased demand is boosting the overall gross profit margin for residential developers.
