The Dubai real estate sector has seen a record number of real estate transactions as both property sales and rents increased by more than 20 per cent, according to CBRE Middle East in 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 per cent 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 per cent from the 2019 comparable figure, while outperforming the 2023 record-high by 30 per cent.
Dubai real estate boom
This year-on-year growth has been supported by a 42.6 per cent increase in off-plan sales and an 11.3 per cent 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 AED1,000 ($272) per square foot registered a decline of 19.3 per cent from the comparative period a year earlier.
The core market continues to grow and has marked a year-on-year increase of 64.1 per cent in the number of transactions priced between AED1,000 ($272) and AED2,000 ($544) per square foot.
Given the upward pressure on prices and strong demand for upper-mid-end properties, the AED2,000 ($544) and AED 3,000 ($816) bracket registered an increase of 154 per cent 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 AED3,000 ($816) and AED8,000 ($2,178) per square foot registering a drop of 19.5 per cent in the year to May 2024.
Residential properties priced at AED 8,000 ($2,178) per square foot and above only represent 0.2 per cent of total sales registered in May 2024, down from 0.3 per cent 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 per cent, down from the 20.7 per cent growth recorded a month earlier.
Over the same period, average apartment and villa prices increased by 19.8 per cent and 21.8 per cent 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 ($763) and AED 5,228 ($1,423), 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 per cent.
This increase has been underpinned by a 22.2 per cent increase in average apartment rents and a 13.1 per cent 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.
CBRE said it expects rental rates will continue to increase; however, not at the same pace, where already we have been seeing several key and prime residential neighbourhoods heading towards single-digit growth. Affordability constraints are beginning to catch up.
Taimur Khan, Head of Research CBRE MENA in Dubai, said: “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 per cent from 2023, and a staggering 384.3 per cent 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 per cent 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 per cent and in certain core and prime communities it stands fairly close to 100 per cent.
“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 per cent of listings’ prices have remained unchanged, up from 79.7 per cent over the same period a year earlier.
“During the latest period, 4.1 per cent of listings saw price increases, down from 9.9 per cent a year earlier.”
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