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Dubai’s secondary market sales up 31% in September

Downtown Dubai registered the highest sales rate per square foot

Published: Wed 11 Oct 2023, 3:25 PM

Updated: Wed 11 Oct 2023, 8:40 PM

By
Issac John

Overall, the third quarter witnessed brisk sales although September registered a drop. — KT file

Activity levels in Dubai’s residential market softened in September 2023, with total transactions registering a decline of 8.3 per cent compared to a year earlier, according to a real estate consultancy.

Transactions in September declined to 7,523 reflecting a sharp drop of 41.5 per cent in off-plan market sales, whereas secondary market sales increased by 30.5 per cent, CBRE said in its Dubai Residential Market Snapshot – October 2023.

However, analysts at Betterhomes have a contrasting perspective on Dubai's off-plan market, which they argue is promising, having witnessed a notable surge in interest from investors and end-users. With a 40 per cent to 60 per cent increase in the number of foreign and local property buyers, the off-plan market is booming, indicating a favourable environment for real estate investment in the emirate, they wrote in a report recently, pointing out that over the past three months off-plan market has experienced 35 per cent surge in demand year-on-year.

Overall, the third quarter witnessed brisk sales although September registered a drop. Taimur Khan, head of Research – Mena at CBRE in Dubai, said Dubai’s residential market ended the third quarter of the year by notching up another record, where the total volume of transactions in the year to date reached 87,154. “This marks the highest total ever recorded over this period and an increase of 35.4 per cent compared to the previous year. That being said, a slowdown in demand levels has been witnessed on a monthly basis following a decline in off-plan sales, particularly within a number of core residential areas that significantly underperformed their average for the year. This can be largely attributed to the limited supply coming into the market,” said Khan.

The CBRE report said that in the year to date to September 2023, the total transaction volumes reached 87,154. “This is the highest figure registered over this period and despite the slowdown seen in the last month, we expect that the 2023 total will surpass the 92,144 registered in 2022,” analysts at CBRE wrote.

In the year to September 2023, average prices in Dubai increased by 19.6 per cent. Over this period, average apartment prices increased by 19.7 per cent, reaching Dh1,357 per square foot, and average villa prices increased by 18.9 per cent, reaching Dh1,605 per square foot. The average apartment sales rates across Dubai are still below the record levels witnessed in 2014 by 8.8 per cent, although several key residential areas have long outperformed their 2014 benchmark. Average villa sales rates currently sit at 11.1 per cent above their 2014 levels.

The report noted that Downtown Dubai registered the highest sales rate per square foot in the apartment segment of the market, reaching Dh2,453, whilst Palm Jumeirah registered the highest sales rate per square foot in the villa segment of the market, reaching Dh 4,995.

In the rental market, a moderation in the rate of growth continues to be seen, where in the 12 months to September 2023, average residential rents increased by 20.6 per cent, down from the 21.7 per cent growth registered a month earlier. Over this period, average apartment and villa rents rose by 20.7 per cent and 20.1 per cent, respectively. The average annual apartment and villa rents reached Dh108,606 and Dh322,750, respectively, in September 2023.

The highest annual apartment and villa rents were respectively found in Palm Jumeirah, with average asking rents at Dh257,366, and in Al Barari, with average rents at Dh1,098,788.

The report said in the rental market, despite demand remaining elevated, the rate of rental growth has contracted every month this year to date. “Over this period, a number of listings in several residential communities registered a reduction in their rental rates, including Business Bay, Downtown Dubai, Dubai Marina, and Palm Jumeirah. In the year to date to September 2023, asking rents of 22.6 per cent of the overall residential listings within those four areas have actually decreased.”