Dubai real estate sales passed $48bn in the second half of last year as the residential market continues its strong run, according to a report published by Espace Real Estate.
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.
The report indicates that Dubai’s more affordable communities are benefitting from the inflated prices of more established locations.
Dubai real estate analysis
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.
Espace Real Estate said total property sales transactions are up in both the off-plan and secondary market with a combined value of AED178bn ($48.4bn), a 47 per cent increase compared to the same period in 2022.
In the off-plan market, there were 39 per cent more transactions compared to the same period in 2022 and 21 per cent more than in H1.
In the secondary market, there were 21 per cent more transactions compared to the same period in 2022 and 10 per cent 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, five 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 and Bluewaters Islands experiencing a dip.
When looking at transaction volume increase across the price segments, there is a striking upsurge in the above AED20m+ ($5.4m) segment with a 40 per cent increase compared to the same period in 2022 and a 90 per cent increase compared to the previous six months.
The luxury end of the market is seeing a greater increase in year-on-year 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 AED200m ($54.5m).
Findings from Espace’s H2 report highlight that the average sales price in H2 2023 was AED7,125,426 ($1.9m) which was up 28 per cent 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.
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 said: “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 per cent more transactions in H2 compared to the same period of the previous year.”
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 per cent 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 per cent and Jumeirah Islands which increased by 45 per cent and Emirates Hills which increased by 44 per cent.
Apartment communities with the most significant uplift include:
- Bluewaters Island which increased by 74 per cent
- Palm Jumeirah which was up 21 per cent
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, Arabian Ranches 3, Emaar Beachfront and Bluewaters Island.
Fewer 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.
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