Dubai Real Estate Market Witnesses Stabilization After Years of Growth
Dubai’s property market is undergoing a notable phase of stabilization following a continuous upward trajectory spanning over two years. A remarkable event in this journey is the listing of an ultra-luxury apartment in Dubai for an astounding Dh750 million.
While property prices in more affordable areas are nearing stabilization, the high-end and luxury segments of the market continue to experience an upward trend in property rates. This phenomenon underscores the ongoing interest of affluent investors in the property market, a trend that took root shortly after the onset of the pandemic.
According to data provided by Henley & Partners, approximately 4,500 high-net-worth individuals are expected to make the UAE, particularly Dubai, their home this year.
This influx of affluent residents has significantly impacted the local real estate market, contributing to the setting of new records in prominent areas like Palm Jumeirah, Jumeirah Bay Island, Bluewaters, Madinat Jumeirah Living, as well as emerging areas like Tilal Al Ghaf.
Despite these high-ticket transactions, the pace of sales price growth appears to be slowing, with quarterly increases of 2 percent for apartments and 3 percent for villas. The annual changes stood at 14 percent and 15 percent, respectively.
Dubai’s property market continues to experience a surge in new project launches during the second quarter of 2023, reaching levels not seen since the global financial crisis of 2008-09. Notable projects include the $20 billion The Oasis by Emaar and the multi-billion dollar Palm Jebel Ali, alongside ventures by Al Habtoor, Danube Properties, and European developers.
Asteco, a real estate consultancy, reports that approximately 11,000 residential units were delivered in the second quarter of 2023, with the majority consisting of apartments. Although villa supply slowed during the quarter, it is anticipated to regain momentum in the latter half of the year. The pace of supply is projected to increase further, with nearly 20,000 completions planned for 2024-25.
Notably, apartment prices in high-to-luxury-end and mid-to-high-end areas are still on the rise, albeit at a slower pace, ranging between three to four percent, according to Asteco’s figures for April-June 2023.
Villa prices have experienced notable increases in several areas, including Meadows, Dubai Hills Estate, Jumeirah Park, and Arabian Ranches. Meanwhile, areas like Discovery Gardens, Sports City, and International have stabilized with zero percent growth in the previous quarter.
Prominent areas like Palm Jumeirah, Business Bay, and Downtown have been standouts in the post-pandemic period due to strong demand from high-net-worth individuals, achieving record sales. However, the slowdown in price growth indicates the market’s move towards stability and more predictable returns for investors. This also reflects the maturation of the market and the increased stability of returns in the mid-single-digit range.
The market trends suggest that mid-to-high-end properties are likely to continue offering decent returns to investors in the future, while the affordable segment may have reached its peak and might not offer returns as favorable as the luxury segment.