Dubai realty shows increasing signs of maturity

The maturity levels of Dubai’s booming property market is becoming increasingly evident as more data comes to the fore. A latest study shows that two out of every five ready home sales in the third quarter were worth less than Dh1 million.

The ValuStrat Price Index, which tracks residential capital values, rose by 6.7 per cent quarterly and 28.9 per cent annually, reaching 190.1 points. This valuation-based index is benchmarked against a baseline of 100 points established in Q1 2021.

All of Dubai’s freehold villa communities have exceeded the price peaks from 10 years ago, with 98 per cent of houses doubling in value since the pandemic in 2020/21. However, apartments, which account for over 80 per cent of Dubai’s housing stock, have not yet reached these milestones, except for those on Palm Jumeirah.

The ready villa market maintained strong momentum, with capital values reaching 243.2 VPI points, reflecting a slightly slower annual increase of 33.1 per cent and quarterly growth of 7.4 per cent. The top annual performers were Palm Jumeirah (42.8 per cent), Jumeirah Islands (42.3 per cent), and Emirates Hills (33.8 per cent), while the lowest gains were found in Mudon (20.4 per cent) and Jumeirah Village Triangle (20 per cent).

Apartment valuations increased annually from 23.4 per cent last quarter to 24.8 per cent in Q3. Discovery Gardens (33.5 per cent), The Greens (33 per cent), Palm Jumeirah (30.9 per cent), Al Quoz Fourth (29.5 per cent), and Town Square (28.6 per cent) led the yearly growth, while Jumeirah Beach Residence (17.6 per cent), Dubai Sports City (17.8 per cent), and International City (18.1 per cent) showed the slowest gains.

Valuations of highly sought-after prime properties, known for their exceptional views, amenities, facilities, and layouts, surged by 30.7 per cent annually and 7.3 per cent quarterly, reaching a record high of 197.8 points. This growth is measured against a baseline of 100 points established in Q1 2021.

The prime villa market reached 248.8 points, with capital gains of 38.1 per cent annually and 8.3 per cent quarterly, as all monitored villa communities surpassed the previous highs of 2014.

Dubai’s premium apartments experienced accelerated growth, with capital values increasing by 24.7 per cent YoY and 6.5 per cent since the second quarter, reaching 166.6 points. Palm Jumeirah was the first area where apartment prices surpassed the 2014 peaks.

The estimated number of new build units to enter the market this year stands at 35,524 homes. Total estimated completions as of the first nine months stood at 13,217 apartments and 3,751 villas, equivalent to 48 per cent of preliminary estimates for the whole of 2024.

A total of 98,253 apartments and 30,272 villas are currently under construction with handovers promised by 2028. Of these projects, 11 per cent are located in Jumeirah Village Circle, with another nine per cent located in Business Bay followed by Jumeirah Lake Towers with five per cent.

“The market continued to shift towards mid-market and affordable apartments. The average size of sold homes shrunk to its lowest level and average sales prices per square foot softened for the first time this year. Dubai’s property market experienced extraordinary progress in Q3 2024, with record population growth and falling interest rates driving the upswing. Overall, Dubai’s property market set new records in Q3 2024, with villas outperforming apartments and significant growth across the office, hospitality and warehouse sectors,” said Haider Tuaima, director and head of real estate research, ValuStrat.