The real estate market in Dubai is undergoing a significant surge in housing, with tens of thousands of new villas, townhouses, and apartments scheduled for completion and delivery to buyers within the year.
Experts anticipate that property prices for both rentals and ownership will persist in their upward trajectory despite the considerable influx of new units, owing to robust demand from both local and international purchasers.
Surge in new supply
Evans pointed out that another emerging destination is the residential district of Dubai South, featuring semi-detached villas and mansions ranging from three to seven bedrooms.
She emphasized that in 2024, there are plans for the handover of 35,000 projects, driving market expansion and offering lucrative prospects for high returns on investment.
According to Faisal Durrani, the Head of Research for the MENA region at Knight Frank, the projected number of homes to be completed in 2024 stands at 26,154, with a slight increase to 32,667 units expected in 2025. Looking ahead, Durrani estimates that approximately 110,000 units will be finished between now and 2028.
In 2024, notable handovers include the introduction of 380 new branded residences in Vida Residences Dubai Mall Tower, located in Downtown Dubai, with an anticipated completion date in October. This luxury high-rise will offer panoramic views of the Burj Khalifa and the Dubai Fountain.
Moving to Dubailand, the upcoming Rukan community by Continental Investments, an Egyptian developer, is set to deliver 1,299 family-friendly villas in December. Additionally, in Deira, the Jewel of the Creek development has begun unveiling its second phase, which comprises 1,260 new apartments, starting in February. Nestled along the creek, Jewel of the Creek boasts a prime location and an extensive range of amenities spread across one million square meters.
Surging prices amid strong demand
Despite the abundance of supply in the pipeline, real estate consultants foresee a continued surge in property prices throughout 2024 driven by robust demand from both local and international buyers.
Evans notes that in January 2024, property prices hit record highs, reaching $349 (AED 1,284) per sq ft, indicating a consistent upward trajectory. Notably, Emaar Properties spearheaded the off-plan market, securing significant transactions, particularly in Dubai Hills.
While acknowledging the influx of new supply, there is an expectation of a slowdown in the rate of price appreciation, particularly within the segment of ready single-family homes such as villas and townhouses. However, Evans anticipates that ready apartments, especially in established communities, will experience more notable growth rates.
The dominance of the off-plan sector persists, with over 11,500 new units introduced in January alone. According to the January Property Monitor report, apartments make up 93.3 percent of the new inventory by volume, while townhouses and villas constitute 6.2 percent and 0.5 percent, respectively, with a combined gross sales value projected at $8.4 billion (AED 31.1 billion).
Evans forecasts a moderate price growth ranging between five to seven percent in 2024, emphasizing that demand for affordable one-bedroom apartments, particularly among Emirati first-time buyers, is expected to remain robust.
Additionally, she highlights that the implementation of improved infrastructure, such as the new Dubai Metro Blue Line extension, is poised to further stimulate price growth in areas like Dubai Silicon Oasis, Dubai Creek Harbour, and Ras Al Khor, owing to the enhanced transport connectivity.
Evans suggests that the upward trajectory is likely to persist through the initial half of 2024, with a potential shift occurring post-summer, particularly noticeable within the high-end luxury segment during the latter half of the year.
Key drivers of housing demand
Durrani stated that Dubai’s population is projected to double from 3.7 million in 2022 to 7.8 million by 2040. Despite the construction of tens of thousands of new homes, the market still falls short of meeting the needs of the growing population, leading to upward pressure on prices.
He mentioned that their supply tracker indicates 110,000 units are expected to be completed by the end of 2028, averaging 22,000 completions annually, which is below the historical rate of 30,000 handovers per year.
Considering the government’s population growth forecasts, it is estimated that up to 70,000 homes may be required annually until 2028, significantly surpassing the current delivery rate. This suggests that prices are likely to continue rising due to supply-demand imbalances.
Meanwhile, the UAE government is aiming to attract one million remote workers through its virtual working program. The new visa system offers five and 10-year residency options, and eligibility for long-term ‘Golden’ Visas has been expanded, leading to more expatriates opting to purchase rather than rent.
The surge in demand has been supported by an influx of people from various parts of the world.
Recently, Bloomberg reported that hundreds of buyers queued overnight outside the offices of Nakheel PJSC for a chance to purchase over 500 luxury waterfront homes. In November, approximately 800 homes in a new Dubai residential development sold out within hours, generating $844 million for firms backing the project, including Aldar Properties PJSC.
Evans believes that eliminating the minimum down payment requirement for Golden Visa holders will further stimulate investment and housing demand.
Despite expectations of a slowdown in price appreciation and potential market dynamics shifts, overall sentiment towards Dubai’s real estate market remains positive in 2024. Sustained investor interest, coupled with ongoing developments and infrastructure projects, bodes well for the market’s resilience and attractiveness to investors.
This week, Savills global research predicts that infrastructure-focused developments will drive economic growth in the Middle East in 2024, with the majority of these developments concentrated in the UAE and neighboring Saudi Arabia.
According to a statement from the research firm, the growth in the UAE’s residential rental sector is expected to moderate due to new launches and handovers, which should improve supply. However, average price points have risen, and new benchmark prices for luxury properties set in 2023 are expected to persist.
ZāZEN Properties, a sustainable property developer in the UAE, reported 15,489 sales transactions worth nearly AED 49 billion in February 2024 across Dubai’s property market. The Dubai Land Department (DLD) attributes 6,600 of these entries to off-plan properties, amounting to a value of $3.76 billion (AED 13.8 billion).
Although the total sales transactions value last month decreased by 16 percent from January to $13.3 billion (AED 48.99 billion), Madhav Dhar, COO, and founding member of ZāZEN Properties, believes that off-plan properties below the $820,000 (AED 3 million) threshold will continue to drive growth across the emirate as demand for good quality affordable housing options increases.
Luxury developers launch ambitious new projects
Dubai’s leading developers are set to unveil a series of upscale projects in the emirate in the coming years.
This week, Emaar Properties revealed plans to invest $21 billion in two vast developments: The Heights and Grand Club Resort.
While specific details remain scarce, The Heights is projected to cover 81 million square feet with a price tag of $15 billion, while Grand Club Resort, a wellness retreat, will span 60 million square feet at a cost of $6 billion.
Nakheel has been actively engaged in the development of luxury waterfront communities as well. Commencing in September 2023, the company initiated the sale of 800 beachfront villas at Palm Jebel Ali. Furthermore, in early 2024, Nakheel introduced the Rixos Hotel and Residences on the Dubai Islands, showcasing apartments and beach homes.
Additionally, smaller developers are seizing the opportunity presented by the demand for luxury projects. ZāZEN Properties, for instance, unveiled the LEED Gold and Well-certified ZāZEN Gardens development in Al Furjan in September 2022.
Research from property agency Knight Frank, shared with Reuters, revealed that a record 431 Dubai homes were sold for more than $10 million in 2023, nearly doubling the previous year’s figure and establishing it as the largest such market globally.
Shift toward sustainable developments
Developers emphasize that sustainability is gaining importance among Dubai homebuyers and tenants, with ZāZEN’s Dhar highlighting the impact of the country’s “Year of Sustainability” initiative on the real estate sector.
“In addition to affordable housing, there is a growing demand among UAE residents for sustainable homes. The continued emphasis on sustainability, demonstrated by the extension of the ‘Year of Sustainability’ into 2024, is driving this shift and reshaping the real estate market,” stated Dhar.
Nakheel’s ongoing projects are in line with Dubai’s 2040 Urban Master Plan, which prioritizes the development of lively, health-focused communities.
Emaar affirms that its expansive new ventures will contribute to “fostering sustainable development” and “building a brighter future for humanity.”
