JobXDubai

The Dubai real estate sector has witnessed a remarkable surge in transactions, with a record-breaking 44.2% increase in May 2024 compared to the same period last year. According to CBRE Middle East’s latest Residential Market Notes, the total number of residential transactions stood at 15,766, marking the highest monthly figure on record.

The year-to-date volume of sales transactions reached 62,180, registering a significant increase of 384.3% from 2019 and outperforming the 2023 record-high by 30%. This growth has been driven by a 42.6% increase in off-plan sales and an 11.3% rise in secondary market sales.

The core market continues to grow, with a year-on-year increase of 64.1% in transactions priced between AED1,000 ($272) and AED2,000 ($544) per square foot. The upper-mid-end segment has seen a significant increase of 154% in activity levels in the 12 months to May 2024.

The lack of available stock in higher-end segments of the market has impacted activity levels, with sales of residential properties priced between AED3,000 ($816) and AED8,000 ($2,178) per square foot registering a drop of 19.5%.

Average residential prices in Dubai have increased by 20.1% year-on-year, with apartment and villa prices rising by 19.8% and 21.8%, respectively. Palm Jumeirah has recorded the highest sales rates per square foot, with average rates reaching AED 2,804 ($763) and AED 5,228 ($1,423) for apartments and villas, respectively.

The rental market has also seen robust demand, with average residential rents increasing by 21.1% year-on-year. This growth has been driven by a 22.2% increase in average apartment rents and a 13.1% rise in average villa rents.

Taimur Khan, Head of Research – MENA at CBRE, expects rental rates to continue to increase, but at a slower pace. “Demand in Dubai’s residential market continues to record unprecedented numbers, with the highest monthly figure on record registered in May 2024. Despite the strength of this demand, much has been said about the potential dampening impact of new launches on prices.”

The absorption of new stock sits at markedly high levels, with at least 70% of units launched since 2022 sold to date. In core and established residential areas, this figure is, on average, well above 80%, and in certain core and prime communities, it stands fairly close to 100%.

Anecdotally, CBRE has seen that a considerable portion of this demand in the off-plan market is originating from owner-occupiers. Therefore, in the longer term, the increase in supply is expected to provide some relief to the rental market, but it is unlikely to create downward pressure on sales prices.

The latest listings data shows that in the year to date to May 2024, 88.4% of listings’ prices have remained unchanged, up from 79.7% over the same period a year earlier. During the latest period, 4.1% of listings saw price increases, down from 9.9% a year earlier.

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