Dubai real estate: Property market shatters records with over 30,000 transactions in Q1 2024

The removal of the UAE from the FATF Grey List has played a pivotal role in fueling the current bull market, which shows no signs of slowing down, the Betterhomes Q1 2024 Residential Market Report said.

“With over 34,000 transactions recorded at the DLD, Q1 2024 was officially the biggest quarter on record for the Dubai real estate market. With the removal of the UAE from the FATF Grey List, the current bull market looks set to be with us for some time to come. Sales agreed at Betterhomes went up in March by 34 percent year on year, and those newly signed deals will be reflected in the next quarter’s numbers, so we can expect the market to remain hot, despite the recent rains,” Richard Waind, Chief Executive Officer of Betterhomes, said.

Dubai price trends to persist throughout 2024 and into 2025

While the population grew by 26,000 in the first three months of 2024, only approximately 6,500 new homes were handed over, exacerbating the supply-demand imbalance.

This shortage of ready homes has had a ripple effect on rental stock, resulting in a 22 percent year-on-year increase in rental prices.

The villa segment has been particularly impacted by the lack of supply in the secondary market, according to Waind.

Although secondary sales fell in Q1, the off-plan market more than compensated, with over one project launched every single day between January and March. Off-plan sales now account for a staggering 58 percent of all transactions in the emirate.

Looking ahead, as Dubai continues to attract talent at its current rate, Waind anticipates current price trends to persist throughout 2024 and into 2025.

Relief from the supply crunch is not expected until 2026 and 2027, when a substantial volume of supply is projected to enter the market, potentially easing pressure on prices, Waind said.

The much-expected fall in interest rates, however, appears unlikely to materialise until later in the year, as US employment numbers continue to outperform expectations, and US inflation remains stubbornly high, he added.

Surging demand and buyer profiles

The influx of new residents has fueled a 31 percent increase in buyer leads at Betterhomes, with average selling prices for apartments and villas rising by 3 percent and 13 percent, respectively.

Notably, the percentage of mortgage buyers has climbed to 37 percent, compared to 35 percent in the same period last year, driven by the rising number of end-users, which now stands at 63 percent.

Indians and British nationals continue to dominate as top buyers at Betterhomes, alongside prominent buyer nationalities from France, Italy, and the UAE, underscoring Dubai’s enduring appeal to investors worldwide.

Luxury market thrives

Dubai’s luxury market, defined as transactions over AED15 million, has experienced a 30 percent increase, solidifying the city’s status as a global hotspot for high-end branded residences, the report said.

Secondary transactions have surged by 46 percent, while off-plan transactions have seen a modest 4 percent increase.

The secondary market is led by 82 transactions in Palm Jebel Ali, followed by Palm Jumeirah with 48 and Sobha Hartland II (MBR) with 33.

In the off-plan market, Palm Jumeirah recorded 51 transactions, with Dubai Water Canal and Dubai Healthcare City II trailing with 28 and 18 transactions, respectively.

Tenant leads at Betterhomes rose by 8 percent, fueled by a 7 percent increase in apartment leads and a notable 19 percent surge in villa leads, while townhouse leads declined by 19 percent.

However, leasing transactions saw a substantial 21 percent decrease, aligned with the rising rental prices, encouraging tenants to renew existing contracts rather than seek new properties.

The recent revision of the RERA Calculator index in March could potentially lower rents over the long term, as the previous iteration caused a significant gap between renewal and open market prices, leading to stagnant market conditions and limited property supply.

Rental price trends in Dubai

Rental prices across all communities witnessed consistent increases compared to Q1 2023.

Dubai Creek Harbour saw the most significant surge in apartment rentals, soaring by 28 percent year-on-year, while Jumeirah Park experienced a substantial 24 percent year-on-year increase in villa rentals.

Palm Jumeirah, Dubai’s most exclusive residential area, reinforced its prominence, with average apartment rentals reaching AED 261,500 and villa rentals at AED 855,878.

Dubai Hills Estate boasts an average apartment rental of AED 190,649, followed by Jumeirah Beach Residences at AED 158,928. Among villa communities, Jumeirah Golf Estates stands out with an average rental of AED 617,486, followed by Emirates Living at AED 373,722.

The surge in rental prices can be attributed to factors like the growing presence of high-net-worth individuals (HNWIs) in the city and the UAE’s removal from the Financial Action Task Force (FATF) grey list, enhancing Dubai’s attractiveness as a destination for investment and residency.