The year 2023 marked a remarkable milestone for the Dubai real estate market, with both the volume and value of sales transactions reaching new highs. Average prices in September 2023 surpassed the previous peak set in September 2014, and this upward trajectory continued through the final quarter, despite a slight dip in off-plan transactions.
Several factors contributed to this surge in the market. Rising rents and a desire for long-term stability motivated tenants to transition into buyers, even with higher interest rates. Betterhomes, a real estate agency, observed a significant shift towards domestic demand, with a rise in the percentage of buyers identifying as end users, from 38 percent to 44 percent. This movement towards end user home ownership signals the maturing nature of the market and instills confidence in greater price stability in the future.
The prediction of an increase in new Dubai residents also materialized, surpassing 100,000 in 2023. The rapid population growth has firmly established Dubai as a preferred destination for global citizens, attracted by the promise of safety, an unparalleled lifestyle, and a favorable business and tax environment.
However, the number of new properties handed over in 2023 remained relatively unchanged from the previous year, failing to keep pace with Dubai’s expanding population. This supply-demand imbalance has resulted in increased pressure on rents, with Betterhomes reporting a 24 percent rise in average rental prices. Many tenants are now opting for lease renewals, leading to higher tenant retention rates and record-breaking occupancy levels.
Dubai’s luxury real estate market experienced an unprecedented year, primarily due to the influx of millionaires from around the world. The UAE ranked above the United States and second only to Australia in terms of wealth migration. In 2023, more high net-worth individuals were attracted to the emirates than any European tax haven. Waterfront residences, such as Palm Jebel Ali and Palm Jumeirah, continued to enjoy enduring popularity, while branded residences also remained in high demand.
Looking ahead to 2024, an increase in new property handovers is anticipated to align with the ongoing influx of expats to Dubai. While a slowdown in the rapid price increases observed since 2019 is expected, continued growth at more sustainable levels is foreseen, reflecting the evolution and maturity of Dubai’s real estate market.
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