Buyers in the core districts are being priced out and compelled to search for properties in the outskirts due to Dubai developers’ aggressive off-plan payment programs and record-high prices.
Due to price peaks in the city’s most popular neighborhoods, some of the more reasonably priced and cost-effective neighborhoods are experiencing price increases due to buyers and investors moving there.
Due to the high demand from millionaires and other high-net-worth individuals moving to the emirate, property prices in desirable areas like Downtown, Business Bay, Palm Jumeirah, Marina, Sheikh Zayed Road, and Dubai Hills Estate have been rising at single—to double-digit rates quarterly during the COVID-19 pandemic.
Additionally, off-plan properties are being snatched up by foreign investors because they are far less expensive than those in other international cities like Singapore, London, New York, Hong Kong, Paris, etc.
According to Prathyusha Gurrapu, head of research and consulting at Cushman & Wakefield Core, citywide sales prices recorded a strong 20% year-over-year gain in Q3 2024, continuing their rising trend for the 17th consecutive quarter.
In the third quarter of this year, apartment rates increased by 19%, while villa prices increased by 23% year over year.
Wakefield & Cushman Suburban and reasonably priced areas are driving the market, according to core data.
“This surge is largely driven by relatively lower price points in these areas and the substantial price growth in central districts, pushing more buyers to invest in suburban regions. Discovery Gardens recorded the highest price increase at 43 per cent, followed by Jumeirah Lakes Towers and Dubailand (Remraam) at 34 per cent and 28 per cent, respectively. Meanwhile, City Walk and Dubai Hills Estate both registered moderate increases of 12 per cent,” said Gurrapu, adding that “This shift highlights the growing demand for value-driven investment opportunities in suburban areas, as buyers are being priced out of the central districts and seek alternatives in outer, suburban locations.”
Additionally, as the demand for off-plan real estate keeps rising steadily, several developers in Dubai have started to offer aggressive payment options. Since demand is driving up the cost of building materials and some developers are having trouble finding qualified contractors, these payment options guarantee that projects are delivered and completed on time to consumers.
“The sustained high demand for off-plan properties prompted some developers to introduce aggressive payment plans, with structures reaching as high as 80/20 or 75/25. This trend is making homeownership through off-plan purchases more challenging for lower-income individuals and families, especially those looking for larger apartments or villas,” said Asteco, a Dubai-based real estate services firm.
The third quarter also saw a strong off-plan transactional activity, with developments from well-known developers and in prime locations frequently selling out in a matter of days or even hours. A combination of important elements, including a well-known brand, a prime location, high-quality product selections, competitive pricing, and alluring payment plans, contribute to this impressive achievement.