The Dubai real estate market, while still thriving, is beginning to stabilize. Cushman & Wakefield Core’s Q2 2024 market update highlights that although the market remains strong, growth is slowing, particularly in the secondary residential sector, which is gradually entering a stabilization phase.
Property Prices Continue to Climb
For the 16th consecutive quarter, property prices in Dubai have increased, with a notable 21% annual rise. Ultra-prime properties are performing exceptionally well, with over 300 homes selling for AED 20 million ($5.4 million) or more between April and June. However, Cushman & Wakefield Core notes early signs of market stabilization.
Fewer Handovers Amid a Surge in New Launches
In Q2 2024, there was a marked drop in property handovers, with only 5,391 units delivered compared to over 8,350 in Q1 2024. Yet, the market expects a surge in handovers during the second half of the year, with 24,300 residential units anticipated by year-end, meeting the ongoing demand to buy off-plan property in Dubai.
Prathyusha Gurrapu, Head of Research and Consulting at Cushman & Wakefield Core, emphasizes that new project launches continue to rise, showing a 42% year-on-year increase. This trend is driven by strong demand for off-plan property investment in Dubai and the aggressive land acquisition strategies of both large and small developers, which include many of the top developers in the UAE.
Off-Plan Sales Dominate the Market
Off-plan transactions are currently leading the Dubai real estate market, significantly outpacing the secondary market. While secondary market transactions grew by just 5%, off-plan transactions saw a substantial 61% spike. In Q2 2024, off-plan sales were more than double the number of secondary market transactions, highlighting the strong investor interest in buying investment property off the plan in Dubai.
Signs of Market Stabilization
Cushman & Wakefield Core also observes that primary off-plan sales prices (inventory sold by developers) are higher than secondary off-plan prices (resales by individuals) across most Dubai districts. Although the price difference remains in single digits, it indicates that sellers are finding it challenging to match original prices and are selling slightly below market value.
Other signs of stabilization include an increase in the number of sales listings with unchanged prices during H1 2024. Furthermore, since Q3 2023, the median residential listing price has declined by an average of 7% quarter-on-quarter, indicating a gradual market adjustment.
Prime Market Trends
Dubai’s city-wide sales prices continue their upward climb, with a 21% year-on-year increase. However, prime districts have seen relatively modest price rises, while mainstream and affordable areas are experiencing steep hikes, impacting affordability. Despite a recent slowdown in off-plan transaction volumes, Dubai remains a leading global ultra-prime market, with more than 305 residential properties sold above AED 20 million ($5.4 million) in Q2 2024.
Rental Market Observations
The rental market in Dubai is also stabilizing, with city-wide villa rents rising by 13% year-on-year, and apartment rents up by 22%. However, household incomes are not keeping pace with these rising rents, leading to a reduction in disposable incomes. This trend has resulted in a higher percentage of tenants renewing their leases, with a 14% increase in renewals during Q2 2024.
Cushman & Wakefield Core notes that, similar to the sales market, mid-market apartment districts have experienced the steepest rent increases, while prime districts have seen more moderate growth.
Conclusion
The Dubai real estate market is gradually stabilizing, with off-plan sales continuing to outperform the secondary market. As more investors buy off-plan property in Dubai, the market remains attractive, particularly for those looking at off-plan property investment. However, with the pace of growth slowing, a more balanced market is emerging, which will be essential to monitor in the coming months.
