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Dubai real estate continues on growth track

Key barometer shows 6.4% expansion in first quarter

During the first quarter of 2024 the Dubai real estate market witnessed significant growth across its residential and commercial sectors, as indicated by the latest data from the ValuStrat Price Index (VPI).

The ValuStrat Price Index or the VPI, is a valuation-based price index constructed to represent periodic change in capital values and rental values experienced by typical residential and commercial properties.

In the residential segment, the VPI for capital values surged by 6.4 per cent quarterly and 24.7 per cent annually, reaching 167.5 points, compared to the base of 100 points in Q1 2021. This growth was driven by a 5.7 per cent quarterly and 20.1 per cent annual increase in apartment valuations, propelled mainly by mid-affordable communities.

Valuations of apartment units saw continued upward momentum, up 5.7 per cent on a quarterly basis and 20.1 per cent when compared to the same period last year, as mostly mid-affordable communities drove the VPI to another record expansion, reaching 139.2 points. Top annual performers were Discovery Gardens (32.6 per cent), The Greens (29.8 per cent), Palm Jumeirah (29 per cent), The Views (24.8 per cent), Town Square (24.5 per cent), Al Quoz Fourth (24.1 per cent), and Dubai Production City (23.9 per cent).

Villas remained resilient, achieving 211 points with a yearly increase of 29.6 per cent, reaching a 10-year high in prime villa values. Moreover, the office sector witnessed a remarkable upswing, with office unit valuations soaring by 29.9 per cent annually, reflecting sustained demand for premium office spaces. In Q1 2024, villa valuations grew 7.7 per cent quarter-on-quarter. The highest annual performers were Jumeirah Islands (32.2 per cent), Palm Jumeirah (31.9 per cent), Dubai Hills Estate (30.6 per cent), and Mudon (27.2 per cent).

“The latest data from the ValuStrat Price Index highlights the strength and dynamism of Dubai’s real estate market. With steady growth across residential, office, and industrial sectors, Dubai continues to attract investors and businesses, positioning itself as a premier destination for real estate investment in the region,” Haider Tuaima, director and head of real estate research at ValuStrat, said.

Prices of prime properties in Dubai grew 26.7 per cent Year-on-year and 7.3 per cent quarter-on-quarter setting a new record of 173 points. This is compared with 100 base points as of Q1 2021. Highly desired prime villas reached a new 10-year high of 211.8 points with capital gains of 33.1 per cent Year-on-year and 8.5 per cent quarter-on-quarter. Luxury apartments continue catching up with villas, as capital gains leaped 21.6 per cent annually and 6.2 per cent when compared the previous quarter, to reach 149.4 index points, setting new price records for prime apartments.

Residential asking rents jumped 11.7 per cent when compared to the same period last year, and 3 per cent since the previous quarter. Apartment asking rents grew 16.4 per cent Year-on-year and 4.4 per cent quarter-on-quarter, reaching an average of Dh85,800. Villa rentals rose 1.3 per cent quarterly and 6.1 per cent annually to an average yearly rent of Dh403,800. Residential occupancy in Dubai was estimated at 87.7 per cent during the first quarter.

The estimated number of new build units to enter the market this year stands at 46,558 homes. Total estimated completions as of the first quarter stood at 5,770 apartments and 1,038 villas, equivalent to 15 per cent of preliminary estimates for the whole of 2024. A total of 85,999 apartments and 21,230 villas are currently under construction with promised handovers by 2028, the report said.

The average ticket size of off-plan homes rose 5.3 per cent annually to Dh2.7 million. The citywide average transacted price for off-plan properties was Dh19,978 per sq m (Dh1,856 per sq ft). Off-plan Oqood (contract) registrations grew by 20.3 per cent Year-on-year and 63.1 per cent quarter-on-quarter, equivalent to investments worth Dh55.3 billion.

Valuations of office units in Dubai jumped 29.9 per cent annually and 4.3 per cent quarterly, this marked the 12th consecutive quarter of growth which reflects continued demand for high quality office space within well connected locations in the city. The ValuStrat Price Index covering Dubai’s office capital values reached a record 194.2 points, almost double the 100-point base set in Q1 2021. The weighted average price for office space was Dh15,952 per sq m (Dh1,482 per sq ft). Continued double digit annual growth was observed in 5 major central business districts in Dubai: DIFC (38.7 per cent), Jumeirah Lake Towers (36.1 per cent), Business Bay (33.3 per cent), and Barsha Heights (24.2 per cent).