As off-plan sales continue to dominate the market, Dubai is set to see three new master communities emerge in 2024, boosting the much-needed villa and townhouse supply to the market while ushering in the next phase of expansion for the emirate.
According to Property Monitor, a leading real estate market intelligence provider, the new master communities on the horizon include two new communities announced by Emaar —The Heights Country Club and Grand Club Resort — as well as the third forthcoming in May from Damac.
“These projects, all located in south[1]west areas of Dubai along the E611 corridor, are set to add much needed villa and townhouse supply to the market, as well as usher in the next phase of expansion for the emirate,” Property Monitor said in its report.
Preliminary numbers for new off-plan project launches in February show close to 10,000 units being added to the market for sale throughout the month, with the bulk of launches being for apartments. Launches for single-family homes (villas and townhouses) have represented roughly 15 per cent of new units brought to market in the current market cycle and remain a segment that is under supplied; however this may soon be addressed.
In February, Dubai property price growth continued its modest trajectory with a monthly gain of 0.83 per cent recorded. This follows last months’ meager 0.2 per cent increase and aligns with our forecast for an overall slowing in price appreciation and annual gains anticipated to reach between 5-8 per cent.
According to the Property Monitor Dynamic Price Index (DPI), Dubai property prices currently stand at Dh1,294 per square foot, a little shy of 5.0 per cent over the previous all-time high and market peak of September 2014.
“While price appreciation remains subdued, the monthly volume of sales transactions continues to power on, increasing by 2.6 per cent in February, rising to a total of 11,913 sales and recording as the highest volume ever for the month of February. This new record eclipses that which was set just last year by a whopping 30.4 per cent,” said the report.
Residential transactions, encompassing apartments, townhouses, and villas, accounted for most sales at 92.1 per cent (10,966 transactions). The highest transacted commercial property types were hotel apartments (2.8 per cent), office spaces (2.2 per cent), and land sales (1.7 per cent).
The report noted that the consistently high sales volume is fuelled by seemingly endless demand for off-plan properties, with particular strength in the apartment segment where sales volumes are moving in an uninterrupted upwards direction. Meanwhile, villa and townhouse activity remain flat by comparison, however we believe this has more to do with supply constraints than any shortfall in buyer demand.
“A total of 6,384 off-plan Oqood transactions were registered in January, marking a minor 0.5 per cent month-on-month decrease in volume and a 1.6 per cent decrease in market share, falling to 53.8 per cent. Title Deed sale volumes witnessed an increase, rising by 6.3 per cent and now account for 46.4 per cent of all sales transactions. While Oqood transactions are generally used to measure the off-plan market, several villa and townhouse sales are presented in the Dubai Land Department data as being issued with Title Deeds and as completed properties—instead of being under construction and sold off-plan,” said the report.
Off-plan transactions hold an even more dominant market share of 59.8 per cent, sitting right at the general long-term split between the off-plan and existing sales segments. Meanwhile, resales transactions—any subsequent sale of a property that follows the initial first-time sale from the developer, for an off-plan or completed project—stood at 4,970 in February. This represented a market share of 41.7 per cent, relatively static month-on-month, with initial developer sales maintaining their dominant market share of 58.3 per cent, up just 0.1 per cent.
Mortgage transaction volumes decreased by just fewer than 5.0 per cent in February with a total of 2,868 loans recorded. Loans taken for new purchase money mortgages accounted for 46.1 per cent (up 6.3 per cent from last month) of borrowing activity, with the average amount borrowed being Dh1.77 million at a loan-to-value ratio of 75.6 per cent. Loans for refinancing and equity release saw their market share decrease by 0.3 per cent to 37.6 per cent. The remaining 16.3 per cent (down by 6.0 per cent from last month) was due to bulk mortgages — those taken by developers and larger investors with multiple units.