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Dubai property prices to increase in 2024


Dubai property prices to increase in 2024

Category Chris' CNN

Property prices rally in Dubai will continue next year, but the pace will slow down compared to 2023, with a growth rate of up to 10 percent projected on the back of strong demand from residents, investors and high-net-worth individuals.

Analysts expect that the prime residential market will continue to drive the market, led by Jumeirah, Downtown, Palm Jumeirah and other high-end areas that have witnessed unprecedented demand in the post-pandemic period.

The surge in the rally is fueled by a combination of factors, including a rise in foreign fund inflows, tenants transitioning into property ownership, a growing availability of ready-to-move-in properties, and the interest of investors seeking to capitalize on long-term residency programs like the Golden Visa, Retirement Visa, and Freelance Visa.

According to Moody’s Investors Service, property prices have increased by about 15 percent in Dubai and Abu Dhabi since the second quarter of 2021 and UAE real estate market conditions will remain healthy in the next 12-18 months, but demand will be slower than the past two years.

The property market, which has evolved over the past decade, has two distinct types of buyers. The first is UAE-based residents for whom affordability has weakened as property prices have risen, coupled with higher inflation and interest rates. The second investor type includes high-net-worth purchasers or millionaires who continue to support off-plan demand, some of which are based in the UAE.

Most of these are cash buyers who are less sensitive to inflationary pressures and rising interest rates as compared to mortgage-financed buyers. The proportion of cash buyers has increased considerably in the last two years, benefiting from the UAE’s reputation as a safe haven

For example, according to Moody’s, nearly 60 percent of Sobha Realty’s total sales in 2022 were to non-UAE residents, most of whom were cash buyers. On the other hand, UAE-based buyers make up the bulk of development sales for Aldar in Abu Dhabi and more than half for Emaar Properties in Dubai.

UAE homebuilders continue to launch new projects, with demand even stronger than before the pandemic. New supply is steadily increasing as around 80,000 units are under construction this year in Dubai and Abu Dhabi, according to real estate data companies Reidin and JLL.

Global ratings agency Moody’s expects homebuilders margins will also improve in the next 12-18 months.

A number of developers have launched new projects in the past 18 months and off-plan sales have picked up significantly since. This has led to a significant increase in revenue backlogs across the board for developers.

The Dubai market is currently witnessing its third rally after the pandemic with prices rising across the board.

Author Focus Content Squad
Published 27 Nov 2023 / Views -
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