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Dubai realty shows increasing signs of maturity

Two out of every five sales transactions were below Dh1 million in the third quarter

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 volume of off-plan (Oqood) registrations reached an all-time high, with 32,968 transactions recorded during the quarter, marking an increase of 97 per cent YoY and 32 per cent QoQ, equivalent to investments worth Dh83.2 billion. The average ticket size of off-plan homes fell 19.8 per cent annually to Dh2.5 million, ValuStrat data showed. The citywide average transacted price for off-plan properties was Dh19,537 per square metre (Dh1,815 per square foot).

The third quarter saw 12,883 ready secondary home transactions, up 11.9 per cent quarter-on-quarter and 19.4 per cent year-on-year, equivalent to investments worth Dh29.8 billion, data showed.

The average ticket size of ready properties fell 9.2 per cent quarterly but remained stable annually at Dh2.3 million. A total of 41 per cent of all ready home sales were priced less than Dh1 million.

On the luxury side, there were 53 sales of homes worth over Dh30 million, compared to 62 during the same period last year. The citywide average transacted price for ready units during the quarter was Dh15,414 per square metre (Dh1,432 per square foot), up 7.1 per cent year on year but down 5.5 per cent on a quarterly basis, ValuStrat data showed.

The average apartment size transacted in the third quarter was 95.4 square metre (1,027 square foot). The average villa area was 294.9 square metres (3,174 square feet).

Most transacted locations for ready properties were Jumeirah Village Circle (9.1 per cent), Business Bay (5.6 per cent) and Dubai Marina (5.6 per cent).

In the third quarter of 2024, the Dubai real estate market witnessed 10,118 mortgage transactions across all asset classes compared to 14,977 cash transactions of ready properties The total sales value attributed to mortgage transactions stood at Dh19 billion, with cash transactions totalling Dh28 billion.

“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.