Dubai – CBRE Middle East, the global leader in commercial real estate advisory services, released its latest edition of Dubai’s Residential Market Notes.

In May 2024, the total number of residential transactions stood at 15,766, this is the highest monthly figure on record to date, marking an increase of 44.2% compared to the year prior. In the year to date to May 2024, the total volume of sales transactions reached 62,180, registering a marked increase of 384.3% from the 2019 comparable figure, while outperforming the 2023 record-high by 30.0%. This year-on-year growth has been supported by a 42.6% increase in off-plan sales and an 11.3% rise in secondary market sales.

Dubai’s residential market has started seeing a significant upward shift in which price brackets that transactions are happening, but the importance of and available opportunities in the affordable and core market segments cannot be understated. In May 2024, the number of transactions prices below AED 1,000 per square foot registered a decline of 19.3% from the comparative period a year earlier. The core market continues to grow and has marked a year-on-year increase of 64.1% in the number of transactions priced between AED 1,000 and AED 2,000 per square foot. Given the upward pressure on prices and strong demand for upper-mid-end properties, the AED 2,000 and AED 3,000 bracket registered an increase of 154.0% in activity levels in the 12 months to May 2024. The lack of available stock in the higher-end segments of the market is impacting activity level, with sales of residential properties priced between AED 3,000 and AED 8,000 per square foot registering a drop of 19.5% in the year to May 2024. Residential properties priced at AED 8,000 per square foot and above only represent 0.2% of total sales registered in May 2024, down from 0.3% a year earlier, owing to the limited levels of demand and availability of such assets.

Elevated levels of activity have also continued to underpin stronger-than-expected price growth. In May 2024, average residential prices in Dubai registered a year-on-year increase of 20.1%, down from the 20.7% growth recorded a month earlier. Over the same period, average apartment and villa prices increased by 19.8% and 21.8% respectively. In both apartment and villa segments of the market, Palm Jumeirah recorded the highest sales rates per square foot, with average rates reaching AED 2,804 and AED 5,228, respectively, as of May 2024.

In the rental market, robust levels of demand continue to drive performance, where in the year to May 2024, average residential rents in Dubai increased by 21.1%. This increase has been underpinned by a 22.2% increase in average apartment rents and a 13.1% rise in average villa rents. Higher rents within Dubai’s core and prime residential areas have led to a spillover into secondary communities which are now recording considerable increases in rents on an annual basis. Looking ahead, we expect that rental rates will continue to increase; however, not at the same pace, where already we have been seeing several key and prime residential neighborhoods heading towards single-digit growth. Affordability constraints are beginning to catch up.

Taimur Khan, Head of Research MENA in Dubai, comments: “Demand in Dubai’s residential market continues to record unprecedented numbers, where in the month of May 2024, the highest monthly figure on record has been registered in May 2024, with a total of 15,766 transactions. For the year to date to May 204, this brings total transaction volumes to 62,180, up 30.0% from 2023, and a staggering 384.3% from the same period in 2019. Despite the strength of this demand, much has been said about the potential dampening impact of new launches on prices, where supply may again start to outweigh demand. However, the absorption of new stock sits at markedly high levels, where our headline analysis shows at least 70.0% of units which were launched since 2022 have been sold to date, due to lags in data, we anticipated that this number is materially higher. In Dubai’s core and established residential areas, this figure is, on average, well above 80.0% and in certain core and prime communities it stands fairly close to 100.0%. Anecdotally, we are seeing that a considerable portion of this demand in the off-plan market is originating from owner-occupiers, therefore, in the longer term, we expect that the increase in supply will provide some relief to the rental market, but for sales prices, it is unlikely to create downward pressure. That being said, we are starting to see some price stability begin to take hold, the latest listings data shows that in the year to date to May 2024, 88.4% of listings’ prices have remained unchanged, up from 79.7% over the same period a year earlier. During the latest period, 4.1% of listings saw price increases, down from 9.9% a year earlier.”

About CBRE Group, Inc. 

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2023 revenue). The company has more than 130,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.