The end-user base in Dubai’s property market continued to grow in 2023, with buyers identifying as end users increasing from 38 per cent to 44 per cent, a report showed on Thursday.
According to Betterhomes’ Dubai real estate market report for FY2023, the emirate recorded 120,742 residential sales transactions, up 38 per cent on the previous record of 87,454 set in 2022. “This growth came predominantly from apartment sales, which increased by 49 per cent to 94,155,” the report said.
The villa and townhouse segment grew more modestly, up 9 per cent to 26,587, largely due to a lack of supply in key communities. Off-plan sales were responsible for the majority of the growth in transactions in 2023, up 48 per cent year-on-year. This led to off-plan sales accounting for the majority of residential real estate sales, up from 48 per cent to 54 per cent of all transactions. This growth was from the sale of apartments, which grew by 63 per cent year-on-year and made up 87 per cent of transactions in the off-plan market.
In the secondary market, transactions increased by 21 per cent. The sale of apartments was up by 32 per cent, whilst the sale of ready villas and townhouses grew by approximately 3 per cent. The villa market continues its growth as many buyers move towards more readily available and affordable apartments due to stock restrictions and high purchasing costs.
The total value of Dubai property sold in 2023 was Dh322 billion, up 52 per cent year-on-year. This outpaced transactional growth, giving a strong indication of rising prices. Overall, prices in Dubai rose by approximately 18 per cent in 2023, an acceleration of the 11 per cent increase seen in 2022. “This has put average prices at a record high, more than 3 per cent above the previous market peak seen in September 2014,” the report noted.
Recently, higher interest rates have gone some way to dampen demand and price increases in the secondary market. “If, as the market currently expects, interest rates begin to fall sometime in 2024, this would make mortgages more affordable, increasing buyer demand and putting further upward pressure on prices,” the report said.
After a record-breaking 2022, Dubai’s luxury real estate market maintained its momentum in 2023, witnessing an impressive 89 per cent growth in transactions over Dh15 million. The appeal of long-term visas, a favourable tax regime, the lifestyle, and the relative affordability of luxury homes in Dubai attracted wealthy investors from across the globe, with 4,500 millionaires expected to have moved to the UAE in 2023.
There were 34,810 homes delivered in 2023, a modest 1.5 per cent increase on the previous year. This was considerably lower than the current market conditions required, which supported a continued increase in prices throughout the year. Whilst buoyant market conditions prompted developers to announce over 80,000 new homes in 2023, their delivery is not anticipated until late 2025 and into 2026. “The modest increase in supply projected for 2024 is unlikely to keep up with demand, amidst Dubai’s rapidly growing population, offering little relief to tenants,” the report said.
“This movement towards end user home ownership is a great sign of the maturing nature of the market and should give confidence to greater price stability in the years to come. The anticipated increases in new property handovers in 2024 align with the continuous influx of expats to Dubai. Whilst we expect a slowdown in the rapid price increases observed since 2019, we foresee continued growth at more sustainable levels, reflecting the evolution and maturity of Dubai’s real estate market,” Richard Waind, chief executive officer of Betterhomes, said.