Dubai's Summer Real Estate Surge: No Slowdown in Sight

14 September 2023 / Dubai

The scorching summer heat in Dubai typically heralds a slowdown in real estate activities. However, this year, the Dubai real estate market has defied tradition, showing no signs of cooling off. Off-plan sales have emerged as the cornerstone of market dominance, with property prices poised to surpass previous peaks, and numerous new records on the horizon.

Price Appreciation Sizzles:

Dubai's property prices have continued their upward trajectory, with a nearly 2% month-on-month increase in August. Currently standing at AED 1,216 per square foot, they sit a mere 1.4% below the previous market peak of AED 1,234 per square foot.

August Sales Surge:

A record-breaking sales transaction volume was achieved in August, with year-to-date sales up by a staggering 42% year-on-year.

Off-Plan Sales Ascend:

Off-plan property sales have reached their highest market share since the onset of the COVID-19 pandemic, accounting for a remarkable 58.4%. In reality, when accounting for technicalities in the Dubai Land Department's registration process, off-plan transactions now represent a dominant 64.7% of the market.

Rental Yields Hold Steady:

Gross rental yields have remained relatively stable, hovering around the mid-6% mark. However, questions arise about whether these yields have reached their peak, especially as new property handovers increase.

Exceptional Year-to-Date Performance:

Year-to-date figures tell a compelling story. Sales transactions have seen a remarkable 41.9% increase over the same period last year, setting the stage for a potential record-breaking year. Projections hint at over 120,000 sales registrations by year-end, with the 2009 record expected to be surpassed soon.

Off-Plan Projects Drive Transactions:

The launch of new development projects and off-plan property sales have been pivotal drivers behind this year's surge in transactions. In August alone, a striking 35% month-on-month increase in off-plan Oqood transactions was recorded.

Resales Trends:

While overall resale activity decreased slightly, off-plan resales have marginally increased, making up 21.8% of the market. Speculative activity is slowly gaining ground, particularly for properties nearing completion.

Mortgage Market:

Mortgage transaction volumes decreased in August, driven in part by a decline in bulk mortgage loans. However, loans for refinancing and equity release increased in market share. The remaining loans were new purchase money mortgages, with an average loan amount of AED 1.73 million.

Stable Rental Yields:

Average gross rental yields for residential properties have remained relatively stable, increasing slightly in August. However, with an influx of new units entering the market, a shift in the rental landscape is anticipated.

As the year unfolds, Dubai's real estate market shows no signs of a summer slowdown. With property prices edging closer to historical peaks, off-plan sales booming, and records set to tumble, investors and enthusiasts alike eagerly await what the remainder of the year holds in this dynamic and ever-evolving market. Will Dubai continue its upward trajectory, or will a change in the winds bring a new direction? Stay tuned as the Dubai real estate saga unfolds.

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