According to new research by ValuStrat, the Dubai real estate market achieved the most quarterly capital gains in a decade during Q3 2023.
The Villa Price Index (VPI), which measures the housing sector of the Dubai real estate market, increased by 6.1 percent over the previous quarter to reach 96.6 points on the ValuStrat Price Index. This indicated a 15.1% rise over the same time previous year.
Dubai villa and apartment valuations rise in Q3 2023
Villa prices increased by 19.8 percent year over year (YoY) and 7.6 percent quarter over quarter (QoQ) to reach 123.6 VPI points, surpassing the 2014 peaks by 2.6 percent.
The best-performing properties this quarter were Palm Jumeirah (9.5 percent), Jumeirah Islands (9.5 percent), Dubai Hills Estate (9.3 percent), and Mudon (9 percent).
Apartments saw a 4.8 percent quarter-over-quarter (QoQ) gain in VPI, which ended up at 79.7 points. Although this indicated a YoY gain of 11%, it is still 29.2% below 2014 levels.
In this category, the top quarterly performers were Dubailand Residence Complex (6.6 percent), Palm Jumeirah (6.7 percent), The Greens (7.3 percent), and Discovery Gardens (7.5 percent).
Prime property valuations increased 16.5 percent year over year and 6.6 percent quarter over quarter, respectively, to reach 106.2 points for both villas and apartments.
Nonetheless, prime villas saw capital gains of 20.2 percent year over year and hit a new 10-year high of 135.7 points.
The research stated that although prime-located apartments did not perform as well as their villa counterparts, annual gains increased to 13.6 percent and 5.2 percent in comparison to the previous quarter, achieving 90.1 index points.
New construction seen in Dubai during Q3 2023
According to the research, there was a significant amount of new construction in the real estate sector.
53,715 newly built units were projected to hit the market in 2023, based on developer completion schedules.
21,507 apartments and 2,068 villas have been finished as of the first nine months of the year, which is equal to 44% of the initial projections for the full year.
Off-plan property market in Dubai
The average purchase size in the off-plan house sector increased by 13% year over year to AED 2.5 million.
For off-plan properties in the city, the average transacted price was AED 20,035 per square meter or AED 1,861 per square foot.
Off-plan contract registrations (Oqood) increased by 2.5% QoQ and 19.1% YoY, or AED 36.9 billion, in value.
The third quarter saw the most number of off-plan properties traded, breaking monthly records set by Mudon, Business Bay, and Dubailand Residential Complex individually.
Move-in ready apartments sees over 11,000 transactions in Q3 2023
11,308 transactions were recorded in the ready (secondary) home sales segment in the third quarter, indicating a YoY rise of 17.7 percent.
Though it was down 5% from the previous quarter, ready-to-move-in properties witnessed an average purchase amount of AED2.3 million, a YoY fall of 1.4 percent.
Notably, 41.5 percent of all ready-to-move-in sales—mostly apartments—were priced at less than AED one million. 52 home transactions totaling more than AED30 million were reported within the same time period.
Office space sector
The Dubai office space market had remarkable growth, with annual capital gains of 25.5%.
With a 100-point base in Q1 2015, the ValuStrat Price Index increased by 7.3 percent on a quarterly basis to reach 103 points.
In Dubai, the average weighted cost of an office was AED 14,230 per square meter or AED 1,322 per square foot.
Double-digit annual growth was recorded by a number of Dubai CBDs, including Downtown Dubai, Barsha Heights, DIFC, Business Bay, and Jumeirah Lake Towers.
A total of 25,2783 square meters (2.7 million square feet) of office space were expected to be completed by 2023, and another 12,680 square meters (136,500 square feet) were slated for completion in 2024.