Although off-plan sales continue to rise, there are indications that the overall Dubai real estate market may be cooling off, especially in cases where ready-to-move-in deals or secondary market transactions are involved.
Quarter-over-quarter secondary/ready market residential sales fell 2.9% from April to June. This is the second consecutive quarter that the decline has occurred.
“While the market continues to grow month-on-month, it is beginning to slow down, a trend likely to continue over the next year,” said Lynnette Sacchetto, founder of RealTrust.
“This shift will be further influenced by multiple underlying factors, such as new supply entering the market and sellers adjusting their asking prices as they realize their properties are not worth the inflated values of previous years.
“These inflated prices were driven by low supply in some areas and segments and high demand, which has now dissipated.”
Listing for longer
According to data, properties that are listed for sale are listed for longer. RealTrust reports that these listings now average over 90 days, compared to an average of 30 days last year, “indicating a more stagnant sales listing market as of Q2-2024.”
Additionally, price softening is beginning to manifest itself here. The report states that, as of September 2023, the “median residential listing price value started to decline month-on-month by an average of 5%.”
“This was the first sign that the market was transitioning from a seller’s market to a buyer’s, a reality we are now seeing,” said Lynnette.
“Individual sellers in these off-plan projects are struggling to sell at opening prices, which is the prices they originally bought for, or below, to avoid the next developer payment they cannot afford. (They’re) opting to take a loss instead of the premiums they were promised when they originally purchased at the peak of the market in 2022 and 2023.
“This has been a common scenario over the last few months and likely to increase as a significant amount of off-plan supply begins to transition in the pipeline.”
Emerging market dynamics
As these trends play out, ‘expect changes in prices’ in both the sales and rental markets. “Areas such as Jumeirah Village Circle, where demand is very high and supply is very low, have seen prices more than double over the years,” says the report. “However, there is potential for balance as approximately 30,000 new residential units, representing 80 per cent of JVC’s current housing stock, are expected to enter the market in the coming years.”
Another “high demand area with low supply and skyrocketing prices” is Business Bay, which is expected to see the construction of 20,000 new residential units soon. In the upcoming years, 14,000 new residential units will be added to Dubai South.
