Dubai: Why plot prices are rising? Shortage of prime land, high demand from developers, end-users

Plot prices in Dubai, especially across prime areas, have doubled, even quadrupled in some plots, in the past two areas. There is hardly any prime land plot available in the emirate such as Jumeirah Bay, say industry executives.

Due to the strong demand for real estate across the emirate in the post-pandemic period, plot sale rates have also skyrocketed on the back of high demand from local and foreign investors and developers as well as end-users to wish to build their own homes.

Interestingly, sales of Dh100 million-plus plots have become a norm, too, in Dubai in the last year or so. According to figures released by Dubai Land Department released on Friday, 189 plots were sold for Dh2.28 billion during this week ended on June 16. The top three transactions were land in Palm Deira for Dh167.88 million, followed by land sold for Dh136 million in Business Bay, and land for Dh125 million in Al Thanyah First.

Supply extremely tight

“There is hardly any prime land available in Dubai at the moment,” says Ahmed Abou El Naga, head of institutional sales of Metropolitan Group.

“With the current spike in the off-plan market, we are seeing several local developers wanting to launch new projects. They are actively looking to secure prime plots, and as a result, we are seeing an upward movement in prices. We are also seeing international developers entering the market. Since the beginning of 2023, these developers are partnering with brokers, contractors and consultants to venture into the Dubai market,” said El Naga.

In 2022, Metropolitan Premium Properties and Mallorca Properties closed Dubai’s single biggest residential land transaction of Dh690 million deal for three sea-front plots at Dubai Marina.

Dr Taieser Al Saati, executive partner at Luxhabitat Sotheby’s International Realty, said supply is extremely tight in developed centrally located areas, driven by a huge influx of new residents and wealthy expats. “As real estate prices have reached new highs, more and more people prefer to buy plots and build their own custom-made homes, rather than buying ready-made houses from developers as the cost of building a house may also be cheaper than buying it,” he said.

Additionally, prime locations near tourist attractions such as Dubai Mall, are in strong demand, too. For villas and townhouses, plots to develop a community are quite popular in Meydan and Dubai Land.