More than 80 per cent of the new property units launched in Dubai since 2022 have been sold out, reflecting the consistently high demand for off-plan projects in the emirate.
Dubai has seen local and foreign developers launching real estate projects worth hundreds of billions of dirhams since 2022. According to Dubai Land Department Data, nearly 214 projects have been launched,148 of which are active.
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“Much has been said about the influx of new launches and the potential dampening impact that this may have on prices, where supply may again start to outweigh demand. However, the absorption of new stock sits at markedly high levels, where our headline analysis shows at least 70 per cent of units which were launched since 2022, have been sold to date,” said Taimur Khan, head of research for Middle East at CBRE.
“Due to lags in data, we anticipated that this number would be materially higher. More so, within Dubai’s core and established residential areas, this figure is, on average, well above 80 per cent,” Khan added.
Post-pandemic, many developers have sold their entire inventory in a short span of time. Some of them sold out their projects within a day while a few of them were able to make their sale in just a few hours.
Majority are owners-occupiers
Dubai’s residential market continues to showcase exceptionally strong levels of demand, driven by demand from end-users and residents who want to buy their own property. Most residents opt to buy so they can beat the red-hot rental market and high-net-worth individuals who are migrating to the emirate.
In May 2024, the total volume of transactions stood at 15,766, the highest monthly figure on record to date, marking an increase of 44.2 per cent compared to the year prior, CBRE said.
Similarly, prices have also surpassed the previous peaks witnessed in 2014.
According to Property Monitor, prices stand at Dh1,360 per square foot in May 2024, 10.25 per cent higher than the previous all-time high and market peak of September 2014.
“Anecdotally, we are seeing that a considerable portion of this demand in the off-plan market is originating from owner-occupiers, therefore, in the longer term, we expect that the increase in supply will provide some relief to the rental market, but for sales prices, it is unlikely to create downward pressure,” Khan added.
Real estate consultancy CBRE’s monthly report said there has been a discernible shift in market dynamics since 2019 to date, where the bulk of sales transactions were previously predominantly concentrated in Dubai’s core and prime residential hubs, which were historically either around Dubai’s various Central Business Districts or leisure destinations.
According to Tatiana El Bazi, senior research analyst at CBRE, the most recent data showed that buyers are shifting further away from the city’s core and prime residential areas.
“This is owing to the prevailing market backdrop, vis-à-vis the lack of available and upcoming supply in these established locations, and more and more due to the now significantly higher cost associated with acquiring real estate within the aforementioned neighbourhoods,” she added.