In April, apartments attracted the interest of nearly 58 per cent of property buyers, while villas or townhouses were sought after by 42 per cent of potential buyers.
Signs of emerging trends show a rising demand for apartments in Dubai as an increasing number of professionals relocate to the emirate in pursuit of better opportunities. This stands in contrast to the period during the Covid-19 pandemic outbreak when there was a surge in the sale of villas and townhouses, driven by the desire for larger spaces amidst travel restrictions and limited outdoor activities. As previously reported by Khaleej Times, the continuous population growth has resulted in a situation where the demand for apartments in Dubai has consistently exceeded the available supply.
In 2023, Dubai experienced a population increase of nearly 100,000, coinciding with the introduction of approximately 50,000 residential units to the market. Similarly, during the first quarter of 2024, the emirate witnessed the arrival of 25,700 new residents, while only 6,500 new units became available.
Data indicates that in April, approximately 58 percent of property buyers were in search of apartments, with the remaining 42 percent seeking villas/townhouses. Conversely, among tenants, 79 percent were interested in apartments, while the remaining 21 percent preferred villas/townhouses, marking a noticeable shift towards increased demand for apartments compared to previous months, where villas garnered more attention.
Cherif Sleiman, chief revenue officer at Property Finder, noted, “Despite ongoing shifts in demand, the real estate market remains robust. We’ve observed a notable change in consumer preferences, with prospective homeowners increasingly favoring apartments. This stands in contrast to the villa demand observed during the pandemic, particularly in recent months. Anticipating continued dynamism in the market, especially with developments such as the transition from Dubai International Airport to Al Maktoum International Airport, we foresee renewed demand in emerging areas.”
John Lyons, managing director of Espace Real Estate, commented, “As the population continues to expand and more individuals establish homes in the region, we’ve witnessed a significant rise in mortgage inquiries and buyer registrations over the past quarter.”
According to a study by Property Founder, approximately 64 percent of tenants prioritized apartments, particularly furnished units with ready interiors, while 33 percent sought unfurnished options. Conversely, those in search of villa or townhouse rentals displayed different preferences, with around 55 percent favoring unfurnished properties and 44 percent opting for furnished accommodations.
Given projections for population growth among professionals and market supply, the trend of increasing demand for apartments is expected to persist in the foreseeable future, thereby driving up demand, rentals, and prices for apartments.
Renewed demand in developing areas
Industry executives anticipate a surge in demand for apartments and villas in Dubai South and along Sheikh Mohamed bin Zayed Road and Emirates Road in the forthcoming years. This is primarily attributed to the construction of Dubai Metro’s Blue Line and the relocation of operations from Dubai International Airport to Al Maktoum International Airport.
The majority of this demand is expected to be for off-plan units in emerging areas like Dubai South, JVC, Marjan, Dubailand, Damac Hills, International City, Silicon Oasis, and other communities situated along key routes leading to Al Maktoum International Airport. Off-plan units are favored by investors for their potentially higher returns as the population grows in tandem with airport development and new residential and hospitality projects.
Property Finder reported a significant increase in off-plan transactions, with a year-on-year volume rise of approximately 86.51%, totaling 7,203 transactions, and a surge of 77.09% in value, reaching around Dh13.9 billion compared to Dh7.8 billion in April 2023.
“It is encouraging to witness the sustained surge in interest in off-plan options, driven by the diverse range of choices, the robust pipeline, and the potential for high returns on investment. Recent regulatory changes, such as the requirement for a primary unit permit to advertise such properties, are expected to further enhance the quality of available supply,” stated Sleiman.
John Lyons noted that over the past 12 months, tenants have increasingly transitioned to homeownership due to soaring rental prices and a more accessible mortgage market. “When deciding whether to renew their leases, individuals are weighing the high cost of rent against the affordability of owning a home. Mortgage products have become more attractive, and there have been relaxed visa regulations, making homeownership more attainable,” he added.
