Until 2025, property prices and rentals in Dubai are expected to keep rising due to the city’s population growing 300 per cent faster than the new property supply in the first quarter of this year.
Forecasters in the real estate industry are now extending their predictions for the three-year surge to the following year, fueled by robust demand surpassing supply at an accelerated rate this year, particularly following the UAE’s removal from the Financial Action Task Force’s (FATF) Grey List.
In February 2024, the UAE’s removal from the FATF’s Grey List underscored the country’s commitment to financial transparency, enhancing its appeal to foreign investors.
Although there appeared to be a slowdown in the price rally earlier this year, real estate experts anticipate that the momentum will likely continue into next year, particularly in the luxury segment, based on supply and demand estimates.
Richard Waind, CEO of Betterhomes, highlighted the shortage of ready homes as a significant factor influencing the market this year. With a population increase of 26,000 in the first three months but only around 6,500 new homes delivered, the pressure on rental stock has driven rental prices up by 22% year-on-year.
Looking ahead, as Dubai maintains its rapid growth and attractiveness to talent, current price trends are expected to persist throughout 2024 and into 2025. It’s not until 2026 and 2027 that a significant volume of new supply entering the market is anticipated to alleviate price pressures.
“Waind noted that with the UAE’s removal from the FATF Grey List, the current bull market appears poised to persist for the foreseeable future.
Despite a 45 per cent increase in the number of units handed over in Q1 2024 compared to the same quarter last year, they still fail to keep pace with the demand driven by population growth.
Previously, some real estate analysts anticipated a slowdown in prices and rentals due to a decline in inflows from Russia. However, demand remains strong from high net worth individual investors from other markets such as the US and Canada, thus keeping prices and rentals high in the emirate.
According to Cavendish Maxwell’s Property Monitor report released in April, demand for properties priced between Dh3-5 million increased by 2.6 per cent in March compared to the previous month, while demand for properties priced between Dh5-10 million and Dh10 million-plus grew by 1.5 per cent and 0.2 per cent month-on-month, respectively.”
Real estate developers are racing to debut new projects in both affordable and ultra-luxury segments in response to heightened demand. Seizing upon this trend, developers have recently initiated numerous projects, averaging one launch every 18 hours.
Betterhomes predicts that with major developments underway, increasing demand for off-plan properties, and a growing population influx, the housing supply will notably expand over the next five years.
Dubai experienced a record-breaking quarter in the first three months of 2024, with transactions reaching 34,000—an increase of 20 percent compared to the same period last year, making it the largest quarter in the emirate’s real estate market history, according to Betterhomes.
Off-plan properties remained the primary choice in the market during the first quarter, representing 58 percent of all transactions as both end-users and investors find them suitable. Total sales value surged by 25 percent to Dh87.8 billion. Average villa prices in key communities witnessed growth ranging from 11 percent to 38 percent, while apartment prices experienced a surge ranging from seven percent to 29 percent.
Source : Khaleejtimes
