Dubai Property Market Surges: 2023 End-User Growth and Luxury Real Estate Boom
Dubai's property market witnessed significant growth in 2023, particularly in the end-user segment, with Betterhomes' report revealing a rise in buyers identifying as end users from 38% to 44%. The emirate recorded a total of 120,742 residential sales transactions, marking a substantial 38% increase from the previous record in 2022. The surge was primarily driven by a 49% increase in apartment sales, reaching 94,155 transactions. The villa and townhouse segment experienced a more modest 9% growth, totaling 26,587 transactions due to limited supply in key communities.
Off-plan sales played a pivotal role, contributing to the majority of transaction growth, increasing by 48% year-on-year. Off-plan sales accounted for 54% of all transactions, with apartments witnessing a remarkable 63% growth and constituting 87% of off-plan market transactions. In the secondary market, overall transactions increased by 21%, with apartment sales up by 32%, while ready villas and townhouses experienced around a 3% growth. The villa market continued its growth, driven by buyers seeking more readily available and affordable apartments amid stock restrictions and high purchasing costs.
The total value of Dubai property sold in 2023 reached Dh322 billion, indicating a substantial 52% year-on-year increase, outpacing transactional growth and signaling rising prices. Overall, Dubai property prices rose by approximately 18% in 2023, accelerating from an 11% increase in 2022 and surpassing the previous market peak in September 2014 by more than 3%.
Despite recent increases in interest rates dampening demand and price growth in the secondary market, the report suggests that if interest rates decline in 2024, it could make mortgages more affordable, potentially increasing buyer demand and putting upward pressure on prices.
Dubai's luxury real estate market maintained its momentum from 2022, witnessing an impressive 89% growth in transactions over Dh15 million. The allure of long-term visas, a favorable tax regime, lifestyle offerings, and the relative affordability of luxury homes attracted wealthy investors globally, with an estimated 4,500 millionaires relocating to the UAE in 2023.
A total of 34,810 homes were delivered in 2023, a modest 1.5% increase from the previous year. Despite developers announcing over 80,000 new homes in 2023, their expected delivery is not anticipated until late 2025 and into 2026. The report notes that the modest increase in supply projected for 2024 is unlikely to keep up with demand amid Dubai's rapidly growing population, providing little relief to tenants.
In summary, Dubai's property market experienced substantial growth in 2023, driven by increased end-user participation, off-plan sales, and a surge in luxury real estate transactions. Despite challenges, rising prices, and limited supply, the market outlook remains optimistic, especially if interest rates decline in the coming year.
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By- Sahiba Suri
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