PHOTO
2023 marks a new set of records for the Dubai real estate market, with both the volume and value of sales transactions hitting new highs. In September 2023, average prices surpassed the previous peak set in September 2014, and this upward trajectory persisted through the final quarter despite a dip in off-plan transactions.
A combination of rising rents and a desire for long-term stability has motivated tenants to transition into buyers despite higher interest rates. Betterhomes noted a substantial shift toward domestic demand, with buyers identifying as end users increasing from 38 per cent to 44 per cent. This movement towards end user home ownership is a great sign of the maturing nature of the market and should give confidence to greater price stability in the years to come.
The predictions for an increase in new Dubai residents certainly came true, with the population increase surpassing 100,000 in 2023. This rapid population growth has cemented Dubai as the destination for global citizens, drawn by the promise of a safe haven, unparalleled lifestyle, and a favourable business and tax environment.
The number of new properties handed over in 2023 was relatively unchanged from the previous year, failing to keep up with the speed at which Dubai’s population is expanding. This supply-demand imbalance has put pressure on rents, resulting in Betterhomes observing a 24 per cent increase in the average rental price. We see more tenants opting for lease renewals, leading to a surge in tenant retention rates and record-breaking occupancy levels.
Dubai’s luxury real estate market has had an unprecedented year, largely due to the influx of millionaires from across the globe. The UAE ranks above the United States and is second only to Australia in terms of wealth migration. The emirates attracted more high net-worth individuals than any European tax haven in 2023. In particular, the successful launch of Palm Jebel Ali and Palm Jumeirah’s enduring allure showed the ongoing popularity of waterfront residences, whilst branded residences also remained in demand.
The anticipated increases in new property handovers in 2024 align with the continuous influx of expats to Dubai. Whilst we expect a slowdown in the rapid price increases observed since 2019, we foresee continued growth at more sustainable levels, reflecting the evolution and maturity of Dubai's real estate market.
The writer is CEO at Betterhomes.
Realty Bytes/Richard Waind
