Dubai real estate residential prices are still rocketing, but rents are showing signs of slowing down, according to analysis by CBRE.
In Dubai, average residential prices rose by 20.1 per cent in the year to December 2023,
Average apartment and villa prices increased by 19.8 per cent and 21.8 per cent, respectively.
Dubai real estate sales and rents
In the rental market, although demand remains relatively elevated, CBRE analysis identified a continued moderation.
The rate of rental growth softened throughout the year, where in the year to December 2023, average residential rents in Dubai increased by 18.9 per cent, down from the 19.2 per cent growth registered in November 2023.
In terms of supply, a total of 39,190 residential units were estimated to have been delivered in 2023, with 34.4 per cent of this supply being located in Meydan One, Downtown Dubai and Business Bay.
A further 68,880 units are expected to be handed over in 2024.
In December 2023, activity levels softened amid a contraction in the off-plan market, where a total of 6,216 transactions were registered in Dubai’s residential market, down by 30.3 per cent from the year prior.
This softening has been driven by a 69.7 per cent drop in off-plan sales, while secondary market sales increased by 35.3 per cent.
Despite this monthly slowdown, in 2023, the total volume of transactions reached 118,993.
This is the highest figure ever recorded over this period, surpassing the 2022 record total by 29.6 per cent.
Off-plan transactions increased by 31.9 per cent and secondary market transactions increased by 26.3 per cent.
Looking at the prime segment of the market, in 2023, the number of transactions above AED5m ($1.4m) totalled 1,968, down by 15.5 per cent from the previous year.
Over this period, the number of transactions within the super-prime market segment (AED10m/$2.7m and above) dropped by 3.1 per cent to reach a total of 1,003.
Prime and super-prime areas are defined as follows:
- Downtown Dubai
- Emirates Hills
- Jumeirah Bay Island
- Palm Jumeirah
- District One
Looking ahead, price growth in both Dubai’s apartment and villa segments of the market are likely to remain relatively strong; however, CBRE said it is expecting that the rate of price growth will taper off.
In the rental market, on the back of the prevailing market fundamentals, the lack of supply and heightened demand levels, CBRE forecasts that residential rents in Dubai will maintain their upward trajectory, although at a slower pace.
Taimur Khan, CBRE Head of Research, said: “The UAE’s residential market ended the year on a strong note, where the elevated levels of demand continue to drive performance.
“The robust levels of activity, high levels of absorption, which have reduced available supply, will continue to support price growth in both Abu Dhabi and Dubai in the year ahead.
“In Dubai, we expect that rental growth will continue to moderate, however, still remain positive in 2024.”
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