In February, Dubai’s Property Price Growth Maintained a Modest Trajectory

As off-plan sales maintain dominance in the market, Dubai anticipates the emergence of three new master communities in 2024, poised to bolster the supply of villas and townhouses while propelling the emirate into its next phase of expansion. Emaar has announced two new communities—The Heights Country Club and Grand Club Resort, while DAMAC is set to unveil the third community in May, all situated in southwest Dubai along the E611 corridor. This strategic development aims to address the pressing need for housing options and stimulate further growth in the region.

According to Property Monitor, a prominent real estate market intelligence provider, the upcoming master communities are projected to alleviate the shortage of villas and townhouses in the market, catering to the growing demand for residential properties. These developments signify a significant step towards fulfilling Dubai’s vision of sustainable urbanization and enhancing its status as a global city.

In February, the Dubai property market witnessed the introduction of nearly 10,000 units through new off-plan project launches, with a predominant focus on apartments. However, single-family homes such as villas and townhouses, which constitute approximately 15% of the new units introduced in the current market cycle, remain under-supplied. The upcoming master communities aim to rectify this imbalance by offering a diverse range of housing options to prospective buyers.

Despite modest growth, Dubai’s property prices continued their upward trajectory in February, registering a monthly increase of 0.83%. This incremental rise follows a marginal 0.2% uptick in the previous month, aligning with forecasts predicting a gradual slowdown in price appreciation. The annual gains are anticipated to range between 5-8%, indicating a stabilized market amidst evolving economic conditions.

According to the Property Monitor Dynamic Price Index (DPI), Dubai’s property prices currently hover around Dh1294 per square foot, nearing 5% above the previous all-time high recorded in September 2014. While the pace of price appreciation remains subdued, the market continues to witness robust sales activity, with February marking the highest volume of transactions ever recorded for the month. This surge in sales, totaling 11,913 transactions, signifies sustained investor confidence and resilience within the Dubai property market.

Residential transactions, which include apartments, townhouses, and villas, dominated the market, accounting for 92.1% of total sales, totaling 10,966 transactions. Among commercial property types, hotel apartments (2.8%), office spaces (2.2%), and land sales (1.7%) constituted the highest transacted categories.

The report highlighted the persistent high sales volume, primarily driven by strong demand for off-plan properties, especially in the apartment segment, where sales volumes continue to rise steadily. Conversely, activity in the villa and townhouse segment remains relatively stagnant, largely attributed to supply limitations rather than a lack of buyer interest.

In January, 6,384 off-plan Oqood transactions were recorded, marking a slight 0.5% decrease in volume compared to the previous month, with market share dropping to 53.8%. Meanwhile, Title Deed sale volumes increased by 6.3%, now representing 46.4% of all sales transactions. Despite being commonly used to gauge the off-plan market, several villa and townhouse sales were reported as Title Deeds, indicating completed properties instead of those under construction and sold off-plan.

Off-plan transactions maintained a dominant market share of 59.8%, aligning with the long-term split between off-plan and existing sales segments. Resale transactions, including subsequent sales of properties after the initial developer sale, reached 4,970 in February, representing a market share of 41.7%. Initial developer sales continued to hold a strong market share of 58.3%, with a minimal 0.1% increase.

Mortgage transaction volumes experienced a slight decrease of nearly 5.0% in February, totaling 2,868 loans. New purchase money mortgages accounted for 46.1% of borrowing activity, showing a 6.3% increase from the previous month, with an average loan amount of Dh1.77 million and a loan-to-value ratio of 75.6%. Loans for refinancing and equity release saw a slight decrease in market share to 37.6%, while bulk mortgages, taken by developers and larger investors with multiple units, constituted 16.3%, down by 6.0% from the previous month.