Dubai Real Estate – A Recap & Forecast
In 2023, Dubai’s real estate market saw remarkable growth, recording 113,000 property transactions totalling $112 billion, as reported by the Dubai Land Department (DLD). This marked a 38% increase in transaction volume and a significant 56% surge in value compared to the previous year, making it the most successful year on record.
Interestingly, more than half (56%) of these transactions involved ready properties, accounting for 61% of the total value. The numbers suggest a thriving real estate market in Dubai, with a robust demand for completed properties.
Looking ahead to 2024, real estate experts, like those from the ValuStrat agency, predict a more moderate growth rate of 5–7% in property prices. This signals a shift in the real estate cycle, with a projected resurgence in the apartment market compared to a more restrained growth in the villa market.
Furthermore, there’s anticipation of a potential reduction in mortgage rates throughout 2024. This could encourage tenants to transition from renting to property ownership, especially given the trend of rising rents outpacing property purchase prices.
A key development that could impact demand is the announcement of the Dubai Metro Blue Line. This is expected to have positive effects on areas like Dubai Silicon Oasis, Ras Al Khor, Dubai Creek Harbor, and International City.
Turning our attention to the rental market, there is an expectation of continued growth in apartment rents, particularly for new contracts. Existing tenants might experience higher renewal rates, possibly due to updates in the RERA rental calculator.
On the villa front, rents seem to be stabilizing, reaching a potential price ceiling. This has prompted tenants to seek more affordable options, a trend likely to persist into early 2024.
Shifting gears to the commercial sector, office prices experienced a notable surge in 2023, reaching 103 VPI points in Q3. This upward trajectory is expected to continue in key business districts such as JLT, DIFC, Business Bay, Downtown Dubai, and Barsha Heights. Notably, office sales hit a 10-year peak in 2023, with 669 transactions completed in Q4. This suggests steady growth in commercial demand is likely in the first half of 2024.
Beyond the real estate sector, the broader economic outlook for the UAE appears positive. The UAE Central Bank forecasts a 4.3% economic growth rate for 2024. Additionally, the IMF estimates a 4% growth in the UAE’s real GDP in 2024, with S&P Global attributing this expansion to the non-oil sector.
In summary, Dubai’s real estate market has shown resilience and growth in 2023, and while 2024 may bring a more moderate pace, the overall outlook remains optimistic. The anticipated reduction in mortgage rates and key infrastructure developments are factors expected to influence the market positively in the coming year.
