Dubai real estate market faces competition from Abu Dhabi, Ras Al Khaimah: Experts
Residential property prices in Dubai’s off-plan segment are expected to rise by up to 15 percent in the second half of 2024, driven by increasing construction costs and ongoing demand from international investors, according to industry experts.
Property prices in Abu Dhabi and Ras Al Khaimah (RAK) – emerging UAE real estate hotspots – are also anticipated to experience significant price hikes in the coming months, with high-end properties in RAK potentially seeing a 50 percent increase leading up to the casino opening.
In addition to the surge in construction costs – which have reportedly increased by 2-3 percent in recent months due to global supply chain issues – ongoing economic instability overseas and geopolitical events are attracting international investors to the UAE property market, maintaining high demand, industry insiders noted.
“The off-plan property market is likely to see a 10-15 percent price increase due to soaring demand,” said Yogesh Bulchandani, Founder and CEO of Sunrise Capital, a prominent Dubai-based developer, in an interview with Arabian Business.
Ramjee Iyer, Chairman and Managing Director of Acube Developments, another major Dubai real estate company, indicated that market trends suggest a 15 percent price hike in Dubai’s off-plan property market for the rest of the year amid the real estate sector boom.
Notably, the optimistic price outlook for H2 2024 comes despite a report by ValuStrat revealing a decrease in transactional volumes in Dubai’s residential real estate sector in June – the first decline since the pandemic – although off-plan sales saw a substantial 33 percent increase.
The rise in the off-plan segment is partly due to stricter regulations by the Dubai Land Department (DLD), which mandate that developers place investors’ funds in escrow accounts. These funds can only be used for project-specific expenses. This measure, intended to reduce the risk of project delays and ensure financial transparency, is believed to have increased the attractiveness of off-plan investments.
Abu Dhabi, RAK to give hot competition to Dubai
Industry experts have indicated that the residential real estate sectors in Abu Dhabi and Ras Al Khaimah (RAK), two emerging hot spots for international investors, are poised to provide strong competition to Dubai. Both markets are expected to experience a surge in demand and prices in the coming months.
Bulchandani mentioned that the surge in demand, particularly from wealthy international investors, along with increased construction costs, will contribute to the spike in property prices.
“The rise in construction costs is obviously challenging for developers,” he added.
According to ValuStrat, affordable apartments and villas in the UAE capital experienced significant price increases in June, with apartments rising by up to 10 percent and villas by more than 6 percent.
The luxury housing sector also saw a price increase of 6 percent for apartments and over 10 percent for villas, especially in waterfront developments like Al Reem Island, Al Raha Beach, and Yas Island.
Overall, the ValuStrat Price Index saw a 4.2 percent annual rise and a one percent quarterly increase, with apartment prices up by 2.7 percent and villas by 5.7 percent annually.
Iyer mentioned that while Abu Dhabi’s market will maintain steady growth, Ras Al Khaimah’s property market is expected to experience a price surge for the remainder of the year, driven by frequent property launches that elevate prices with each new phase.
“This trend is particularly noticeable in Al Marjan Island,” noted the top executive of Acube Developments.
In recent months, Ras Al Khaimah’s residential market saw a significant price increase of 20-25 percent over the past eight months.
“The surge in property prices in Ras Al Khaimah highlights its rising attractiveness as a real estate investment destination.
“With ongoing developments and increasing demand, prices are anticipated to rise by as much as 50 percent by the time the casino opens,” Iyer stated.
Changing trends in Dubai’s real estate market
Industry insiders report significant recent trend changes in Dubai’s residential real estate market. International investors and buyers are increasingly favoring integrated communities and projects featuring smart home technologies.
“We are noticing a rising demand from buyers for properties within fully integrated ‘complete’ communities,” Iyer stated.
“People now prefer living in areas that offer great amenities and a variety of activities,” he added.
Bulchandani highlighted that modern buyers are more environmentally conscious and prioritize sustainability. They seek properties equipped with smart home technologies, the latest energy-saving innovations, and eco-friendly features.
Industry insiders have noted a recent rise in demand for townhouses and villas, although supply remains limited.
“This is likely because more people are settling in Dubai for the long term,” Iyer said.
Dubai South continues to perform well, along with Jumeirah Village Circle (JVC), Furjan, and areas along the newly announced metro blue line.
People desire more space and are willing to live further from the main city to get larger properties with bigger plots, according to senior executives at a leading developer. This is why areas like Dubai South and the Expo area are thriving.
Iyer also mentioned that the Dubai market has been witnessing some interesting demographic changes recently.
“For instance, British investors have surpassed Indians this year as they flock to the UAE for Golden Visas and tax-free benefits, as well as high rental yields and the emirate’s unparalleled standard of living,” he said.
