In 2023, the number of buyers who identified as end users in Dubai’s real estate market increased from 38% to 44%, according to a report released on Thursday.
According to Betterhomes’ Dubai real estate market report for FY2023, the emirate recorded 120,742 residential sales transactions, up 38 percent on the previous record of 87,454 set in 2022. “This growth came predominantly from apartment sales, which increased by 49 percent to 94,155,” the report said.
The market for villas and townhouses increased more slowly, by 9% to 26,587, mostly because there wasn’t enough inventory in desirable neighborhoods. Off-plan sales, which increased by 48% on an annual basis in 2023, accounted for the majority of the growth in transactions. As a result, off-plan sales increased from 48% to 54% of all transactions, making up the majority of residential real estate sales. The sale of apartments, which accounted for 87% of off-plan transactions and increased by 63 percent annually, was the primary driver of this growth.
The secondary market saw a 21% increase in transactions. The sale of ready-to-move-in villas and townhouses increased by about 3%, while the sale of apartments increased by 32%. Due to supply shortages and high purchase prices, many buyers are shifting to more easily accessible and reasonably priced apartments, which is driving growth in the villa market.
Property in Dubai sold for a total of Dh322 billion in 2023, a 52% increase over the previous year. This is a clear sign of growing prices as it outpaced growth in transactions. In 2023, prices in Dubai increased by roughly 18% overall, which was a faster rate of increase than the 11% increase in 2022. “This has put average prices at a record high, more than 3 percent above the previous market peak seen in September 2014,” the report noted.
Recently, higher interest rates have gone some way to dampen demand and price increases in the secondary market. “If, as the market currently expects, interest rates begin to fall sometime in 2024, this would make mortgages more affordable, increasing buyer demand and putting further upward pressure on prices,” the report said.
Dubai’s luxury real estate market continued to grow in 2023, with transactions over Dh15 million witnessing an impressive 89% growth, following a record-breaking 2022. Rich investors from all over the world were drawn to Dubai by the city’s lifestyle, favorable tax environment, long-term visa policies, and relatively cheap luxury real estate. It is anticipated that 4,500 millionaires will have settled there by 2023.
In 2023, 34,810 homes were delivered, a slight increase of 1.5% over the year before. This was far less than what the state of the market demanded, which allowed prices to rise steadily all year long. Although developers announced over 80,000 new homes in 2023 due to favorable market conditions, their delivery is not expected until late 2025 or early 2026. “The modest increase in supply projected for 2024 is unlikely to keep up with demand, amidst Dubai’s rapidly growing population, offering little relief to tenants,” the report said.
“This movement towards end-user home ownership is a great sign of the maturing nature of the market and should give confidence to greater price stability in the years to come. The anticipated increases in new property handovers in 2024 align with the continuous influx of expats to Dubai. Whilst we expect a slowdown in the rapid price increases observed since 2019, we foresee continued growth at more sustainable levels, reflecting the evolution and maturity of Dubai’s real estate market,” Richard Waind, chief executive officer of Better homes, said.