Prices in Dubai have increased 8.3 percent in the past year. The strong demand for off-plan properties has helped the market to maintain its gains. But, a lack of new supply is limiting new property sales. This is creating a buyer’s market. In fact, the demand for larger homes is likely to reignite the market. The prices of ready properties in Dubai are currently at 2011 levels, but demand for larger homes is expected to remain robust.
Off-plan transactions in Dubai have increased by 307 per cent
The UAE is on track to meet its goal of building a set number of new housing units per year, and off-plan investment opportunities are attracting generational interest in Dubai. First-time buyers can now afford a home in the city without paying the high prices of London. Second-home buyers can invest in a property that can be rented out for the holidays while still retaining a part-time use during the year.
In fact, a recent report by a property consultancy firm said that off-plan transactions in Dubai have increased by 307% since January 2017. These transactions are not entirely one-way. There are a range of investors, ranging from locals to foreigners, looking to purchase a home in Dubai. While some people say the Dubai property market has reached a bubble, others argue that the real estate market is only starting to realize its potential and is heading towards a stabilisation.
Demand for off-plan properties has been robust
The demand for off-plan properties in Dubai’s residential property market has been robust throughout the first quarter, with completed properties making up the bulk of the transaction volumes. In March, 63.2 per cent of transactions were for title deeds, marking the strongest month for the off-plan segment since September 2020. After March, new launches will slowly resume. Meanwhile, new development projects are already underway in popular areas.
Off-plan projects are benefiting from higher rental yields and resale values. With secondary market prices continuing to rise, some investors have been cashing in. This has triggered a domino effect, driving demand for off-plan projects. Buyer demand is diverse and varied. Some buyers want penthouses overlooking the beach while others prefer townhouses in family neighbourhoods.
Demand for larger homes could reignite the market
The UAE’s real estate market may be about to enter a softening period, with oversupply keeping prices at low levels. In a soft market, buyers have more bargaining power and prices are falling. The soft market has led to price reductions in recent months, with residential property prices falling 12.3% compared to a year ago in January. A recent survey conducted by ValuStrat indicated that demand for luxury properties fell 0.1% in January. Damac Properties is not likely to start any new projects in the current environment, focusing on luxury villas.
Prices of ready properties in Dubai have increased by 8.3 percent in the last year
Despite rising rents, investors are still deciding to purchase property in the UAE, despite rising rents. Despite the strong economy, demand for ready-to-move-in properties is still relatively low. However, there is a trend of increasing demand in the coming years, according to a Reuters poll. There are 63,500 new apartments scheduled to be completed in Dubai this year, which will increase supply even more.
In March, the off-plan market in Dubai saw 37,403 transactions worth Dh1.8 billion, while the secondary market recorded 4,114 deals worth Dh15.3 billion. These numbers increased by 39.9 percent compared to January 2021, and this trend continued into 2021. In February alone, the number of secondary/ready property sales transactions was the highest in a single month since 2009.
