According to a recent industry report, 2023 was the best year ever for the residential sector in Dubai’s real estate market, with transaction activity posting a 29 percent annual growth to an all-time high of 118,200 units.
This was the first time in the emirate’s real estate market that the total number of transactions exceeded 100,000.
According to a report by global real estate services provider Savills, Dubai’s real estate market has also seen steady growth over the past year, driven by the country’s growing and diversified economy overall, policies like the most recent change to the requirements for real estate investors to qualify for the Golden Visa, and the city’s growing expatriate population.
The report claims that Dubai is currently one of the few cities in the world experiencing consistent demand growth, which began when the limitations brought on by COVID-19 were lifted.
“Under-construction properties dominated demand during the year as 55 percent of the units sold were off-plan,” the Dubai Property Market Report for 2023 by Savills said.
It stated that end-user activity has slightly decreased but there has been a shift in demand toward investments throughout the year, particularly in the second half.
In 2023, 53,200 ready units were sold, and 65,000 off-plan units were sold overall.
There was a lot of transaction activity going on in places like Dubai Sports City, Arabian Ranches, Jumeirah Village Circle, and Dubai Hills Estate.
According to Savills, apartments remained the most transacted property type in 2023, making up 78% of all transactions.
According to Swapnil Pillai, Associate Director of Research at Savills Middle East, the real estate industry will benefit from the non-oil sectors’ notable expansion over the last two years, continued health, and favorable position for growth over the upcoming year.
“However, there may be a risk of oversupply for select assets across a few locations, which may limit any significant increase in average prices going forward,” he said.
Dubai office real estate boom in 2023
According to the research, the office real estate market saw a spike in demand in 2023 as a result of government initiatives to promote job creation, continuous economic growth, the non-oil sector’s expansion, and the continuous push to make doing business easier.
Demand was concentrated throughout the year on high-quality green-certified assets; this trend is being driven by a slow but clear shift towards more sustainable operations.
There is a shortage of Grade A assets, which are in high demand, which has led to a decrease in vacancy rates and an increase in rentals.
According to Savills, the DIFC micro-market and its surrounding Grade A developments were highly sought-after by companies, particularly those in the financial services and advisory/consultancy sectors. As a result, rents in DIFC increased by an average of 22% year over year.
In contrast to other international markets, where demand for office space is still below the pre-pandemic average, Paula Walshe, Director of Transactional Services at Savills Middle East, stated that the overall theme for 2023 in Dubai was one driven by expansion and new market entry.
“Mergers and acquisitions (M&A) activity across the country also led to consolidation-led demand for office space across the city,” Walshe said.
Co-working space providers have been steadily growing in the city as a result of the high demand for well-run facilities that provide flexible and affordable options.
Industrial real estate thrives
According to the report, Dubai’s industrial and logistics sector was one of the most resilient real estate asset classes in the city, with market activity expected to stay strong into 2023 due to the non-oil sector’s ongoing growth.
As occupiers increase their warehouse footprint, high-quality assets—especially larger facilities exceeding 10,000 square meters—remain scarce.
According to Savills, businesses are in high demand for built-to-suit warehouse space as they invest in contemporary warehouse facilities that offer enhanced operational functionality and sustainable features, and as they prepare for future expansions.