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Dubai real estate: Apartments dominated the market, accounting for 83% of transactions in Q1 2024

Jumeirah Village Circle, Business Bay, Dubai Maritime City, and Dubai Marina dominated transactions for apartments in Q1 2024

Dubai real estate: Apartments dominated the market, accounting for 83% of transactions in Q1 2024

The Dubai residential real estate market in the first quarter of 2024 showed strong growth and resilience, with transaction volumes reaching a record high of 35,100 units. Demand for both off-plan and ready properties remained high, attracting both investors and end-users. The sector continued to be dynamic and promising, with a substantial 35% increase in transaction volumes quarter-on-quarter. Apartments continued to dominate the market, accounting for the highest transaction volume, while the villa segment also maintained steady activity. Factors contributing to the market’s success included population growth, economic resilience, business confidence, and a thriving tourism and hospitality sector.

The off-plan market is off to a great start

According to Dubai Residential Market Report by Savills, in Q1 2024, off-plan sales surged by 73% compared to the previous quarter and 39% year-on-year. The substantial interest in under-construction units, which constituted 63% of the total transaction volume, can be attributed to the strong demand and rapid sales pace for high-quality assets from reputable developers, along with the attractive incentives offered to buyers during the project launch.

Especially, market activity shifted toward the Dubai Southeast submarkets, where nearly 48% of transactions were concentrated. Micro-markets such as Jumeirah Village Circle (JVC), Arjan, Dubai Hills Estate, Meydan One, and Damac Hills 2 emerged as the most sought-after areas within the Dubai Southeast submarket. Across other locations in the city, demand remained strong in Business Bay and Downtown Dubai in Central Dubai, while properties in Dubai Marina and Jumeirah Lake Towers (JLT) dominated transaction activity in Dubai West.

Apartments stealing the limelight

The report further mentioned that apartments continued to dominate the real estate market, accounting for 83% of all transactions in Q1 2024. 63% of apartment transactions were primary sales, and under-construction apartments constituted 63% of the demand. Core locations near transportation hubs and office centres, such as Downtown Dubai and Dubai Marina, witnessed secondary transactions surpassing primary ones. Other key areas like Palm Jumeirah, Dubai Creek Harbour, and Dubai Hills Estate, also experienced robust activity. Among the top-performing locations in terms of transaction volume were Jumeirah Village Circle, Business Bay, Dubai Maritime City, and Dubai Marina.

In a market marked by high transaction volumes, there was a significant increase in demand for villas and townhouses as well. Popular locations for villa transactions included Damac Lagoons, Damac Hills 2, The Valley, and Tilal al Ghaf. Off-plan projects were particularly popular, making up 63% of all villa transactions. Newly launched villas like Lillian Townhouses in The Valley, Damac Hills Autograph, and Plagette 32 at Tilal al Ghaf were especially sought after, driving the momentum in off-plan transactions.

A robust supply pipeline in Q1 2024

In Q1 2024, around 5,000 new units were launched to the market, with notable apartment launches being Eleve by Deyaar Group, Cello Residences by Taraf Properties, The Sapphire by Damac, Mercedes-Benz Places, and Tulip by Binghatti Group. Moreover, 84% of these new launches were apartment units.

Rental prices are on an upward trajectory in Dubai

Rental rates in Dubai have increased on average by 7%, with apartments seeing an 8% rise and villas growing by 6% quarter-on-quarter. The revised rental index could lead to even higher rents in some areas, potentially ranging from 10% to 20%. Hence, experts believe that tenants may need to consider relocating, downsizing, or looking into property ownership.

The pricing cycle

The demand for affordable properties is on the rise, despite the continued attractiveness of high-end luxury properties. In the first quarter of 2024, there were over 1,000 transactions exceeding $2.7 million (AED 10 million), marking a 41% year-on-year increase. Apartment transactions at $2.7 million (AED 10 million) or more saw a 51% boost compared to the previous quarter, with Palm Jumeirah, Business Bay, and Bluewaters Island being the top luxury locations for apartments. Dubai Hills, Palm Deira, District One, and Tilal Al Ghaf are leading in villa transactions. The capital value growth in the Dubai real estate market remains on an upward trajectory.

According to the Savills World Cities Prime Residential Index, which tracks property prices across 30 global cities, Dubai led the way in 2023 with an impressive 17.4% growth in capital values. On average, property values increased by 20% year-on-year for apartments and 21% year-on-year for villas and townhouses. However, certain well-established locations and segments command a premium due to their superior accessibility and amenities.

Overall, with the upward trend in both rentals and capital appreciation, the Dubai residential real estate market is expected to perform strongly in the near future.