Dubai property prices pass 2014 levels to reach all-time high, up 45% in three years; 130,000 transactions expected this year
Dubai-based Property Monitor says average real estate prices are at an all-time high
Dubai property prices are at an all-time high and up around 45 per cent on October 2020 levels, according to a new report.
In the run up to the turn of the year, average Dubai property prices continue to reach new heights, increasing by 1.17 per cent in November, according to Property Monitor.
The Dubai real estate specialist’s Property Monitor Dynamic Price Index (DPI), said property prices currently stand at AED1,271 ($346) per square foot, just over 3 per cent above the previous all-time high and market peak of September 2014.
Dubai property prices
Since bottoming out in October 2020 Dubai real estate prices have gone on to increase 44.9 per cent on average, with all three residential property types experiencing varying growth trajectories.
In the initial stages of the market recovery, ready single-family homes witnessed the highest demand and the steepest increase in prices with sales of comparable properties routinely achieving 5-10 per cent above the most recent sale.
Apartments — appreciating, but not at the same pace as villas and townhouses — lagged somewhat in their recovery until Q3 2022 and have since realised stronger gains while townhouses and villas have experienced muted growth appearing largely to have topped out.
The total volume of sales transactions in Dubai increased 0.75 per cent month-on-month, reaching a total of 12,223 sales and marks the highest volume ever for the month of November.
Residential transactions, encompassing apartments, townhouses, and villas, accounted for the majority of sales at 89.1 per cent (10,893 transactions).
The highest transacted Dubai commercial property types were land sales (4.1 per cent), hotel apartments (3.6 per cent), and office spaces (1.8 per cent).
Year-to-date there have been 122,657 sales transactions recorded, a 40.3 per cent increase over the same period last year.
Property Monitor said it anticipates there will be more than 130,000 sales registered by the end of the year, surpassing its initial expectations of 120,000 to 125,000.
In November, a total of 5,884 off-plan Oqood transactions were registered, marking a 9.9 per cent month-on-month decrease in volume with Oqood transactions and a 5.7 per cent decreased in market share.
Meanwhile, Title Deed sale volumes witnessed an increase rising by 12.3 per cent and now account for 51.9 per cent of all sales transactions.
Although the market may appear to be slightly tilted in favour of completed properties over off-plan, a correctional adjustment by the Property Monitor team for registration technicalities within the Dubai Land Department (DLD), reveals that several villa and townhouse sales, presented as completed with issued Title Deeds, are indeed under construction and sold off-plan.
In reality, off-plan transactions have held a dominant market share since Q4 2021, currently standing at 60.3 per cent.
New off-plan development project launches remain at record highs, with just shy of 8,500 off-plan units added to the market for sale in November with an anticipated combined gross sales value of AED19.5bn ($5.3bn).
Apartments represent 90.9 per cent, by volume, of this new inventory while townhouses and villas represent 6.1 per cent and 3 per cent respectively.
Year-to-date, new project launches have exceeded more than 86,000 units and AED252bn ($68.6bn) in aggregate sales value, eclipsing the 2022 year-end numbers by nearly 33,000 units and AED95bn ($25.9bn) in value.
With more than 130 additional projects in the planning phases being tracked, in Dubai, Property Monitor said it anticipates that new launches will maintain historically high levels well into 2024.
It also expects to see a shift in the type of product offerings, particularly a reduction in the luxury and ultra-luxury segments.
Mortgage transaction volumes increased by 7.8 per cent in November with a total of 2,917 loans recorded.
This pushed annual volumes to new heights, with more than 33,500 loans year-to-date.
Bulk mortgage loans, those taken by developers and larger investors with multiple units, were a significant attributor to this increase, seeing their market share grow by 3.9 per cent to 13.5 per cent.
The 394 bulk loans issued for the month were spread across several projects, most notably portfolio mortgage registrations in Siraj Tower (203) in Arjan, Rokane G22 (62) in Dubai’s Jumeriah Village Circle, and Al Jawhara Tower (21) in Jumeirah Village Triangle.
Meanwhile, loans for refinancing and equity release saw their market share decrease by 6.4 per cent to 35.1 per cent.
The remaining 51.4 per cent (up 2.5 per cent from last month) of loans taken were new purchase money mortgages with the average amount borrowed being AED1.69m ($460,200) at a loan-to-value ratio of 75.5 per cent.
Currently, high-end luxury units in Dubai command much higher rentals and even higher returns from re-sale
Loans for new purchases and refinancing remain at historically high levels across all residential property types, this indicates continued strength in the overall mortgage market despite relatively high interest rates.
Average Dubai gross rental yields for residential properties in the Emirate continued to remain relatively stable in November, increasing by just 0.08 per cent to 6.68 per cent.
Yields for both villas and townhouses saw modest declines down 0.34 per cent to 4.62 per cent and 0.31 per cent to 6.10 per cent respectively, while yields for apartments experienced a marginal gain, up 0.24 per cent to 7.24 per cent.
The marginal shifts in yields and general plateauing align with our forecasts, and with numerous new development projects edging towards completion the rental market is poised to see an increase in available inventory in the coming months and with that we should also see a gradual decrease in rents throughout 2024.
New off-plan development in Dubai project launches remain at record highs, with just over 11,500 off-plan units added to the market for sale with an anticipated combined gross sales value of AED25bn ($6.8bn).
Apartments represent 81.2 per cent by volume of this new inventory, while townhouses and villas represent 17.2 per cent and 1.6 per cent respectively.
Year-to-date, new project launches have exceeded just over 77,000 units and AED230bn ($62.6bn) in aggregate sales value, eclipsing the 2022 yearend numbers by more than 20,000 units and AED70bn ($19bn) in value.
With more than 100 additional projects in the planning phases being tracked by Property Monitor, it says new launches will maintain their historically high levels for at least the remainder of the year and well into 2024.
Mortgage transaction volumes decreased by 16.1 per cent in October with a total of 2,706 loans recorded.
Bulk mortgage loans mortgages were a significant attributor to this decrease, seeing their market share shrink by 20.1 per cent to 9.6 per cent.
The 259 bulk loans issued for the month were spread across several projects, most notably portfolio mortgage registrations in Qsar Sabah (114) in Dubai Production City, Majestic 1 (57) in International City II, and Burlington Tower (11) in Business Bay.
Meanwhile, loans for refinancing and equity release saw their market share increase by 10.7 per cent to 41.5 per cent.
The remaining 48.9 per cent (up 9.4 per cent from last month) of loans taken were new purchase money mortgages with the average amount borrowed being AED1.78m ($484,700) at a loan-to-value ratio of 75.7 per cent.
The real estate market in Dubai saw several records set in 2023. Image: Shutterstock
Loans for new purchases and refinancing remain at historically high levels across all residential property types, this indicates continued strength in the overall mortgage market despite relatively high interest rates.
Average gross rental yields for residential properties in the Emirate continued to remain relatively stable in October, decreasing by just 0.04 per cent to 6.67 per cent.
Yields for all three residential property types saw modest declines with apartments down 0.05 per cent to 7 per cent, townhouses down 0.11 per cent to 6.41 per cent, and villas down 0.02 per cent to 4.96 per cent.
With numerous new development projects edging towards completion, the rental market is poised to see an increase in available inventory in the coming months.
Property Monitor says it expects to see a gradual decrease in Dubai rents going in 2024.
