• Espace Real Estate’s H2 report for 2023 reveals why more people are choosing to become homeowners, why sales transactions are up in more affordable communities and which communities have seen the biggest rental increases

Dubai, United Arab Emirates: A report published by Espace Real Estate has revealed some of the secrets behind the company’s 46% revenue growth in 2023.

Tracking the last six months of activity across 30 communities in Dubai and concentrating solely on the residential sector, the market insights report explains why transactions are down in some of Dubai’s most established communities and why the supply and demand imbalance in the secondary sales market is leading to substantial increases in the rental market.

Location, location, location?

The report indicates that Dubai’s more affordable communities are benefitting from the inflated prices of more established locations. In the villa and townhouse market, transaction volume was down in H2 2023 in areas such as Palm Jumeirah, The Lakes, Dubai Hills and Jumeirah Park, whereas communities a little further out of the city, such as Mira and Mudon, experienced an uptake in transactions.

A deep-dive into the sales figures, looking at the overall market

  • Total property sales transactions are up in both the off-plan and secondary market with a combined value of AED 178 billion, a 47% increase compared to the same period in 2022.
    • In the off-plan market, there were 39% more transactions compared to the same period in 2022 and 21% more than in H1.
    • In the secondary market, there were 21% more transactions compared to the same period in 2022 and 10% more than in H1.
  • In the villa/townhouse market, many of the well-established communities saw reduced levels of activity in h2 compared to the same period last year.
  • Out of the 10 communities tracked in the apartment sales market, 5 of the communities (The Views and Greens, Downtown Dubai, Jumeirah Lakes Towers, City Walk and JVC) experienced a transaction volume increase with Palm Jumeirah, Dubai Marina, JBR, Emaar Beachfront & Bluewaters Islands experiencing a dip.
  • When looking at transaction volume increase across the price segments, there is a striking upsurge in the above AED 20+million segment with a 40% increase compared to the same period in 2022 and a 90% increase compared to the previous six months.
  • The luxury end of the market is seeing a greater increase in YoY transaction activity than the lower end of the market. Staying consistent with this trend, Espace released its highest transaction for H2 2023, the sale of a Palm Jumeirah Villa at AED 200 million.
  • Findings from Espace’s H2 report highlight that the average sales price in H2 2023 was AED 7,125,426 which was up 28% compared to H2 2022.
  • The UK is top of the buyer nationalities list with India, France, Russia and Egypt making up some of the other most popular buyers.

Location, location, location?

The report indicates that Dubai’s more affordable communities are benefitting from the inflated prices of more established locations. In the villa and townhouse market, transaction volume was down in H2 2023 in areas such as Palm Jumeirah, The Lakes, Dubai Hills, and Jumeirah Park, whereas communities a little further out of the city, such as Mira and Mudon, experienced an uptake in transactions.

Managing Director of Espace Real Estate John Lyons explains: “Sale prices in some of the more established communities have become quite elevated and when you’re comparing that with a similar size or even bigger property in a more affordable community, people are willing to sacrifice on location if they perceive the value to be greater. For example, a community like Mira has seen 49% more transactions in H2 compared to the same period of the previous year.”

A deep-dive into the rental market

  • The average rental price has increased in all of the villa and apartment communities surveyed, except for Arabian Ranches 3 and Emaar Beachfront which have remained the same, and Town Square which has experienced a 27% decline in rental price in H2 year on year.  
  • Villa communities with the most significant leap in average rental price in H2 of 2023 compared to H2 2022, include Jumeirah Golf Estates which increased by 90% and Jumeirah Islands which increased by 45% and Emirates Hills which increased by 44%. Apartment communities with the most significant uplift include: Bluewaters Island which increased by 74% and Palm Jumeirah which was up 21%.
  • Rental transaction volume decreased in 25 out of the 30 communities tracked in this report indicating that elevated prices are leading to reduced market activity. The four communities which bucked the trend are Dubai Hills (up 5%) Arabian Ranches 3 (up 50800%%), Emaar Beachfront (up 118%) and Bluewaters Island (up 20%).
  • Less rental contracts were signed and renewals were down. Inflated prices mean that demand has decreased.
  • Some landlords see the current market buoyancy as a good opportunity to sell, in turn reducing the amount of rental stock that is on the market.

Case study: Buying vs Renting: a new generation of homeowners

The figures in the report indicate that with average rental prices having dramatically increased year on year, tenants are deciding that now is the time to buy, if they have the means to do so.

John Lyons explains an example of an Espace client choosing to buy versus rent:

“We recently saw a young family transitioning from being tenants to homeowners. They had lived in Dubai for about 10 years and have  a two-year-old child and another baby on the way. They were living in Dubai Marina in a two-bedroom apartment and paying AED 155,000 in rent, which is significantly higher than the rent they were paying a few years ago.

“They’d been saving for many years and managed to amass the AED 550,000 which is what they needed to buy a AED 2.4million townhouse in the affordable community of Villanova. As a result of this decision, their mortgage payments will be cheaper than their rent. They’ll be paying AED 130,000 capital and interest, rather than AED 155,000. For this lower cost, they get to upsize to a 3-bedroom villa plus maid’s room so they will have more space, a garden and live in a nice community with parks, pools and more.”

“We are seeing this trend a lot. Many of our tenants who become buyers have lived in the region for a while and consider Dubai to be their home which gives them the confidence to invest in the long-term, rather than continuing to pay high rental prices.”

So, what does the future hold?

John Lyons has these predictions for the market:

  • Based on increased demand, we anticipate a rise in valuations in Dubai’s more traditionally affordable communities. This in turn will close the gap resulting in the start of a new pricing wave in Dubai’s more established communities which have been inflated for some time now.
  • Competitive pricing is coming into the mortgage market with different banks looking to offer more competitive rates. This combined with the fact we will see interest rates start to fall this year, will make it easier for people to buy.

To read the full report, visit: https://www.espace.ae/latest-property-news-detail/dubai-real-estate-market-report-h2-2023

For all media enquiries, please contact:
Maryanne Peacock
maryanne@thecommsclubdxb.com

About Espace Real Estate

Established in 2009 in the United Arab Emirates, Espace Real Estate is one of Dubai’s leading property brokerages providing a full suite of property-related services across residential sales & leasing, mortgage services, property management, and short-term holiday rentals. 

The award-winning property brokerage offers a wealth of experience, tailoring world-class services that offer added value in fulfilling the property needs of both residents and investors in Dubai. 

Espace Real Estate, with its leading market share in many of Dubai’s most well-known communities, manages middle to upscale and ultra-luxury properties, well-suited for families living in Dubai across more than 55 communities.

Having organically grown to a team of over 195 employees, Espace Real Estate has established itself as a well-respected and well-known market-leading brokerage. Built on the values of transparency and knowledge the team is managed under a British style of leadership with 7 different nationalities sitting on the senior management team. Espace Real Estate is a several-time winner of Property Finder’s Best Quality brokerage award and has attained several awards from Bayut. Winning the Dubai Land Department award in recognition as one of the most transacting real estate brokerages in Dubai 2023 is one of the biggest highlights for Espace to date.