In July 2024, sales of under-construction properties accounted for 60% of total transactions, marking a 49% year-on-year increase.
Anyone with even a casual interest in Dubai’s real estate scene knows that it’s currently experiencing remarkable growth and has been for quite some time. Since the end of the global pandemic, Dubai’s property sector has consistently thrived, setting numerous records along the way.
In 2019, Dubai’s real estate transactions reached a total value of $61.5 billion, representing a 2.1% increase from the previous year. However, in 2020, the Covid-19 pandemic caused this figure to drop to about $47.65 billion, reflecting the adverse effects felt worldwide.
Fortunately, the emirate quickly rebounded, with over $80 billion in real estate transactions reported in 2021. Many analysts expected a return to normalcy afterward. However, Dubai’s property market has continued to outperform expectations in the post-pandemic era, with transaction values exceeding $172 billion in 2023.
While the market has remained strong in 2024, a notable shift seems to be occurring in the ratio of off-plan to secondary real estate transactions. The substantial rise in under-construction property sales to 60% of total transactions in July 2024 is indicative of this trend.
So, what is driving the current popularity of Dubai’s off-plan property market? Here are some insights…
**Supply and Demand**
The answer largely hinges on basic supply and demand principles. As interest from high-net-worth individuals (HNWIs) and local residents has grown, there has been an increasing scarcity in Dubai’s ready-to-move-in housing market.
This situation is further exacerbated by ongoing population growth in the emirate, which saw an increase of nearly 100,000 people between January and August 2024, aligning with government objectives. If this pace continues, Dubai’s population is projected to surpass 5.5 million residents by 2040.
The combination of heightened interest from affluent investors and the influx of new residents is putting considerable pressure on the available supply of ready homes. Consequently, it’s no surprise that prospective buyers are turning to off-plan projects to fulfill their housing needs.
**Abundance of Projects**
While limited availability in the secondary market has certainly boosted demand for off-plan properties, this isn’t the sole reason for their current success. The numerous new developments launched since the pandemic has played a significant role in driving this growth.
Last December, I shared a blog detailing 20 projects introduced by Damac Properties within a single year. This year alone, we’ve seen the launch of various additional projects, including ELO (1, 2, and 3) and Violet at Damac Hills 2; Riverside, a new master-planned community; and Shoreline by Damac, a beachside residence on Al Marjan Island in Ras Al Khaimah.
And that’s just Damac! In April, Property Monitor reported that a new project is being launched in Dubai every 18 hours, on average. Additionally, developers in Dubai are expected to deliver over 38,000 new homes by the end of this year. With unprecedented demand, off-plan communities are providing opportunities for thousands of potential buyers to enter the local property market.
**Enhanced Customization Options**
Lastly, off-plan properties are particularly appealing for those seeking homes that can be tailored to their specific preferences. These under-construction developments allow buyers to personalize their future residences in ways that are often unavailable in the secondary market.
From modern décor and custom fixtures to tailored room layouts and integrated technology, off-plan properties can be designed to meet the unique needs of future residents. Conversely, ready homes are, by nature, already finished, leaving buyers to accept what is available and make changes over time.
In conclusion, the off-plan market is experiencing rapid growth due to various factors. However, this does not imply that Dubai’s secondary real estate sector is struggling; in fact, transactions in this area saw a 5% increase in Q2 2024. Nonetheless, with off-plan deals rising by 61% and accounting for more than double the sales of ready homes during the same period, it’s evident which direction the market is headed.
While demand for secondary units in Dubai is likely to remain strong, it appears that the off-plan segment will continue to lead in transaction volumes for the foreseeable future.
