Dubai Real Estate Market Review 03-Jan-2024
Below are the latest real estate news and transactions.
Dubai rents set to climb 20% in 2024
Dubai’s real estate market shows no signs of slowing down in 2024, with rental prices in prime areas expected to rise by up to 20% following a remarkable upswing of 23-30% in 2023. This sustained growth is attributed to increased investor interest, an influx of professionals, population growth, and Dubai’s appeal as a haven for the wealthy. A continued higher rate of net migration compared to the delivery of new homes is expected to keep pushing rental prices up.
In the first half of 2023, rental prices shot up by 23%, with a year-end projection of around 30%. Ilnara Muzafyarova, head of a real estate management firm, predicts a 20% increase in short-term rentals and a 15% rise in long-term rentals for 2024, paralleling a 15% rise in apartment prices from mid-2022 to mid-2023. S&P forecasted a 5-7% increase in house prices for 2024. Since January 2020, Dubai rents have surged by approximately 42%, and house prices by about 33%. The average villa rent reached $88,400 per year, with a 19.2% increase noted in November.
The real estate market's vibrancy is reflected in escalating property values and booming transactions. Owners of properties like a one-bedroom unit in Dubai Marina have seen a 21.2% increase in monthly income, with expectations of even higher returns in 2024.
Despite this growth, Asteco reported a gradual moderation in the rental market's growth rate in the third quarter, with rental gains at 3-4% for apartments, villas, and offices. Annually, the changes were 18-29%. Property Finder data indicates a high demand for one-bedroom apartments and larger villas or townhouses, with a preference for furnished homes.
Dubai’s population, which stood at over 3.6 million in July 2023, is projected to reach 5.8 million by 2040, further driving demand for residential space.
Read the full article at Khaleej Times
More property buyers to opt for mortgages as interest rates set to drop in 2024
In 2024, the UAE real estate market is likely to see more mortgage transactions as the Federal Reserve is expected to lower interest rates by 25 to 100 basis points, following 11 previous rate hikes. This decrease in interest rates will make mortgages more attractive, especially to end-users in the UAE. Currently, cash buyers dominate the market, but this trend might shift slightly with more affordable mortgages.
In Dubai, nearly half of the market transactions are off-plan sales, often financed through developer payment plans, which somewhat mitigates the impact of higher interest rates. However, in Abu Dhabi, mortgage transactions play a more significant role, suggesting that a reduction in mortgage rates could have a more noticeable impact there.
Lower mortgage rates are expected to stimulate demand and increase home sales. They might also make property ownership more accessible to renters, especially as rents are rising faster than capital values. This shift could be particularly pronounced in the lower and mid-price ranges, attracting first-time home buyers and investors seeking positive leverage from rental incomes.
The mortgage market is also evolving with technological innovations such as online applications, AI-powered solutions, blockchain integration, and Sharia-compliant mortgages. Additionally, there's a growing focus on sustainable property financing, diverse lending options including peer-to-peer platforms, flexible repayment options, and initiatives to support first-time buyers and affordable housing. These changes, coupled with relaxed visa regulations and the introduction of Real Estate Investment Trusts (REITs), are reshaping the UAE’s property market.
Read the full article at Khaleej Times
Arada signals further expansion into Dubai property market with $163.3mln Zabeel 2 plot
Arada, a master developer, has expanded into Dubai's high-end property market by purchasing a prime land plot in Zabeel 2, adjacent to the Dubai International Financial Centre (DIFC), for AED 600 million from Rital Properties, a subsidiary of Emirates NBD. The 138,466 sq ft plot, situated near Index Tower and Central Park Towers, is strategically located between DIFC and Downtown Dubai. Arada plans to develop a 50-floor luxury residential tower on this plot, comprising 400 premium apartments with views of the Burj Khalifa and Dubai skyline.
The purchase agreement was signed at a ceremony at Emirates NBD Headquarters in Dubai, attended by dignitaries including HRH Prince Khaled bin Alwaleed bin Talal, Vice Chairman of Arada, and Abdulla Qassem, Chairman of Rital Properties. This acquisition represents Arada's third major location in Dubai, reinforcing its status as a leading developer in the UAE.
Arada is already working on the design of this high-end residential project, with full details to be revealed the following year. The announcement aligns with a strong year for Dubai's property sector, which witnessed a 37% increase in real estate transactions to AED 430 billion in the first nine months compared to the same period last year.
Read the full article at Zawya
Dubai Real Estate Transactions as Reported on the 2nd of January 2024
Dubai Real Estate Transactions Favor Ready Properties as of January 2, 2024
As of January 2, 2024, the Dubai property market records indicate a substantial lead in transactions of ready properties over off-plan purchases. The cumulative investment in ready properties has totaled AED 269,532,016.14, with flats making up the majority at AED 170,175,888.14.
In contrast, the off-plan property sector has seen investments amounting to AED 152,612,596.39, with AED 141,110,820.39 attributed to flat transactions. Villa transactions within the off-plan market are reported at AED 10,151,776.00, while hotel apartments and residences stand at AED 1,350,000.00.
The figures for ready property transactions are higher, with villa sales reaching AED 59,299,873.00 and hotel apartments and residences hitting AED 21,600,201.00. The data reflects a market trend where buyers are currently favoring completed units that are ready for immediate use over those that are still in development.
Data Source: Dubai Land Department