Three new master communities are projected to debut in Dubai in 2024, contributing to the much-needed supply of villas and townhouses on the market and ushering in the emirate’s next phase of expansion, even though off-plan sales continue to dominate the market.
A reputable source of real estate market intelligence, Property Monitor, lists The Heights Country Club and Grand Club Resort as two of the upcoming master communities. Damac’s third community is scheduled to debute in May.
“These projects, all located in south[1]west areas of Dubai along the E611 corridor, are set to add much-needed villa and townhouse supply to the market, as well as usher in the next phase of expansion for the emirate,” Property Monitor said in its report.
Based on preliminary data, approximately 10,000 new off-plan project launches took place in February, with the majority of these launches being for apartments. Single-family home launches, which include villas and townhouses, have made up about 15% of all new units introduced to the market during the current cycle. This is still an undersupplied market segment, though this may soon change.
With a recorded monthly gain of 0.83 percent, the growth in Dubai real estate prices in February maintained a modest trajectory. This is in line with our prediction of an overall slowdown in price appreciation and annual gains expected to reach between 5-8 percent. It comes after last month’s pitiful 0.2 percent increase.
Property prices in Dubai are currently Dh1,294 per square foot, slightly less than 5.0 percent above the previous all-time high and market peak of September 2014, according to the Property Monitor Dynamic Price Index (DPI).
“While price appreciation remains subdued, the monthly volume of sales transactions continues to power on, increasing by 2.6 percent in February, rising to a total of 11,913 sales and recording as the highest volume ever for the month of February. This new record eclipses that which was set just last year by a whopping 30.4 per cent,” said the report.
At 92.1 percent (10,966 transactions), residential transactions—which include townhouses, apartments, and villas—accounted for the majority of sales. The most frequently traded categories of commercial real estate were land sales (1.7%), hotel apartments (2.8%), and office spaces (2.2%).
According to the report, the continuously high sales volume is driven by the seemingly insatiable demand for off-plan properties, with the apartment segment seeing the strongest growth in sales volumes. In contrast, the demand for villas and townhouses has not increased, but we think this is more due to supply limitations than a lack of buyer demand.
“A total of 6,384 off-plan Oqood transactions were registered in January, marking a minor 0.5 percent month-on-month decrease in volume and a 1.6 percent decrease in market share, falling to 53.8 percent. Title Deed sale volumes witnessed an increase, rising by 6.3 percent, and now account for 46.4 percent of all sales transactions. While Oqood transactions are generally used to measure the off-plan market, several villa and townhouse sales are presented in the Dubai Land Department data as being issued with Title Deeds and as completed properties—instead of being under construction and sold off-plan,” said the report.
At 59.8%, off-plan transactions have an even larger market share, exactly in the middle of the long-term distribution between the off-plan and existing sales segments. Reselling transactions, on the other hand—any additional property sold after the developer’s first initial sale for an unfinished or off-plan project—remained at 4,970 in February. With first developer sales holding their commanding market share of 58.3%, up just 0.1% from month to month, this represented a comparatively stable market share of 41.7%.
In February, the number of mortgage transactions dropped by less than 5%, amounting to 2,868 loans in total. The percentage of loans taken out for new purchase money mortgages was 46.1%, which is an increase of 6.3% from the previous month. The average amount borrowed was Dh1.77 million, with a loan-to-value ratio of 75.6%. The market share of loans intended for equity release and refinancing dropped by 0.3% to 37.6%. The bulk of the remaining 16.3%, which was a decrease of 6.0% from the previous month, was attributed to mortgages taken out by larger investors and developers who owned several units.