Dubai apartment sales trends in H1 2024 - Mixed trends and strategic shifts

15 Jul 2024

Key points

The Dubai residential apartment market as of June 2024 demonstrates diverse trends, with notable price growth in some areas and declines in others.
The continued strength in the off-plan market suggests that investors remain confident in Dubai's long-term real estate potential, although the varying performance across different areas underscores the importance of strategic location choices for buyers and investors.
While some neighborhoods are thriving with both rising prices and increasing sales, others face challenges where price increases may be curbing demand, or where price declines have not sufficiently stimulated sales.
The off-plan segment will likely remain a key driver of market activity, supported by investor confidence in Dubai's long-term real estate prospects.

Overview of market dynamics in H1 2024

As of June 2024, the Dubai residential apartment market displays a complex and dynamic landscape, with noticeable variations in sales prices and growth trends across different areas. The data highlights a mixed performance across the city, with certain areas experiencing significant appreciation in sale prices, while others face a decline or stagnation.

Overall Market Trends: The median sale price across Dubai stands at AED 12,677 per square meter, reflecting a 6% year-to-date (YTD) growth in 2024, following a 21% increase in 2023. Despite the overall positive trend, some areas have witnessed more substantial price increases, while others have experienced a decline. For instance, areas like Al Barari, Al Sufouh 1, and The Hills have seen strong YTD price growth of 19%, 17%, and 18% respectively, indicating sustained demand and possibly limited supply in these premium locations.

Significant Area-specific Trends: One of the standout performers in 2024 is Dubai Studio City, which has seen a remarkable 52% YTD increase in sale prices, possibly due to a surge in demand driven by new developments or enhanced infrastructure. Living Legends is another area with an impressive 149% increase in sale prices YTD, despite a negative growth of 39% in 2023. On the contrary, areas such as Palm Jumeirah and Business Bay have seen a decline in sale prices by 30% and 5% YTD, respectively, suggesting a potential cooling off after strong growth in previous years.

Sales Growth and Off-plan Market Dynamics: Sales growth in units has varied significantly across Dubai, with some areas like Meydan, Dubai Studio City, and Mirdif Hills witnessing exceptional growth rates of 225%, 325%, and 260% YTD, respectively. This surge might be attributed to increased investor interest, new project launches, or attractive pricing strategies. Conversely, areas such as Al Kifaf, Bluewaters Island, and Culture Village have seen a decline in sales growth, possibly reflecting market saturation or shifting buyer preferences.

The off-plan market continues to play a critical role in Dubai's real estate dynamics. Areas like Al Sufouh 2, Al Kifaf, and Dubai Maritime City have shown high off-plan sales shares of 83%, 70%, and 95% YTD, respectively, indicating that a significant portion of transactions in these areas involves properties still under construction. This trend suggests that investors are betting on future value appreciation and potential returns once these developments are completed.

Prices are well connected with sales volume

When examining the Dubai residential apartment market as of June 2024, there are some noticeable correlations between changes in sales prices and growth in sales units across different areas, reflecting the complex dynamics of supply, demand, and market sentiment. Positive Correlations: In several areas, rising prices appear to be accompanied by strong sales growth, suggesting robust demand. For instance, Mirdif Hills shows a 260% growth in sales units YTD, while sale prices remain steady at AED 12,950 per sqm (0% YTD growth), indicating that despite stable prices, the area has attracted a significant number of buyers, possibly due to new developments or increased livability factors.

Dubai Studio City stands out with a remarkable 52% increase in sale prices YTD and an even more substantial 325% growth in sales units. This correlation suggests that the area is experiencing a surge in demand, likely driven by new projects or a growing reputation as an attractive residential hub. Similarly, Meydan saw an 11% increase in sale prices and a 225% growth in sales units, highlighting the area’s appeal to both investors and end-users.

Negative Correlations: Conversely, some areas exhibit a disconnect between price changes and sales growth. Palm Jumeirah experienced a significant decline in sale prices by 30% YTD, yet sales growth in units has decreased by only 12%. This suggests that despite the drop in prices, the area may still be facing challenges in attracting buyers, possibly due to over-saturation or shifts in buyer preferences toward more affordable or emerging neighborhoods.

Similarly, Al Kifaf has seen a modest 5% increase in sale prices but a dramatic 78% decline in sales growth, implying that the rising prices might be deterring potential buyers, leading to a slowdown in transactions. In Downtown Dubai, prices have slightly decreased by 3% YTD, with a modest 5% growth in sales units, indicating a market that is stabilizing after years of rapid growth.

The correlation between price changes and sales growth in Dubai's residential apartment market highlights varying trends across different areas. While some neighborhoods are thriving with both rising prices and increasing sales, others face challenges where price increases may be curbing demand, or where price declines have not sufficiently stimulated sales. These patterns underscore the importance of understanding localized market conditions and demand drivers in making informed real estate investment decisions in Dubai.

Market outlook: growth, stabilization, and strategic considerations for 2024

The outlook for Dubai's apartment sales market through the end of 2024 is cautiously optimistic, shaped by a combination of strong demand in select areas, ongoing interest in off-plan properties, and varying market conditions across the city.

Continued Demand in Emerging Areas: Areas that have seen significant price increases and sales growth, such as Dubai Studio City, Meydan, and Mirdif Hills, are likely to continue attracting buyers. The surge in demand in these regions, driven by new developments, improved infrastructure, and competitive pricing, is expected to sustain momentum. Investors and homebuyers may continue to target these areas for their growth potential and relatively affordable entry points compared to more established neighborhoods.

Stabilization in Premium Markets: In premium locations like Downtown Dubai, Palm Jumeirah, and Business Bay, the market is likely to stabilize as price corrections take effect. After years of rapid appreciation, these areas may see more balanced growth as buyers seek value and developers focus on completing existing projects. The stabilization in prices could lead to a gradual recovery in sales volumes, particularly if developers offer attractive payment plans or incentives to entice buyers.

Resilience in the Off-Plan Segment: The off-plan market is expected to remain robust, particularly in areas with high off-plan sales shares like Al Sufouh 2, Dubai Maritime City, and Al Kifaf. With a large portion of transactions involving properties under construction, investor confidence in the future value of these developments remains strong. As long as the broader economic conditions remain favorable, the off-plan segment is likely to continue driving a significant portion of the overall market activity.

Potential Risks and Market Adjustments: However, there are potential risks that could impact the market. Economic uncertainties, changes in interest rates, or shifts in global investor sentiment could dampen demand. Additionally, if supply outpaces demand in certain areas, it could lead to further price corrections, particularly in neighborhoods that have seen rapid price increases without corresponding growth in end-user demand.

The Dubai apartment sales market is poised for continued growth in emerging areas and stabilization in more established locales. The off-plan segment will likely remain a key driver of market activity, supported by investor confidence in Dubai's long-term real estate prospects. However, market participants should remain vigilant to potential risks and be prepared for adjustments in response to evolving economic and market conditions. As 2024 progresses, a balanced approach to investment and careful consideration of location and market trends will be essential for success in Dubai’s dynamic real estate market.

Note: YTD is year to date (January – June 2024)

Tags: Sales Prices