Dubai’s residential real estate market has continued to defy expectations, with demand for properties remaining robust despite a surge in new launches over the past two years.
According to the ‘Dubai & Abu Dhabi Real Estate Market Overview Q2 2024’ report by Reidin, the pace of new launches in the first half of 2024 was higher than in 2023, and off-plan sales amounted to $34.3 billion in the same period, putting the market on track to exceed the $58.3 billion recorded in full-year 2023.
“Dubai’s real estate sector benefits from demand from local and international investors,” the report said, adding “Dubai’s resident population, which excludes the number of workers commuting to the city, increased to 3.7 million at the end of 2023, according to the Dubai Statistics Center. We project that it will reach 4.0 million by 2026 on the back of an increasing number of expatriates. Rising rents meant that many residents decided to buy instead of continuing to rent.”
Expat influx fuels robust demand for Dubai’s residential properties
Several visa reforms, including the Golden Visa, have provided stability to residents and attracted wealthy international investors.
“Given our expectation of population growth, high prevailing rents, and the high value per square foot (sq.ft.), returns on real estate investments in Dubai exceed those in most European countries. Therefore, off-plan sale transactions (primary market) are twice as high in first half 2024 as the secondary market and buyers are willing to pay a higher price per sq.ft. for new constructions,” the report added.
Despite the strong performance, the market is expected to balance out by 2026 at the latest, as the residential supply stock is set to increase by about 182,000 units over 2025-2026, significantly higher than the average of 40,000 units delivered per year over 2019-2023.
“Property prices will remain stable over the next 18 months and could decline afterward due to increasing supply. A potential increase in supply could saturate the unfulfilled demand, and lead to lower prices and rents. The market expects residential supply stock will increase by about 182,000 units over 2025-2026, given that the large number of properties that were presold over 2022-2023 will be delivered,” the report added.
The report also highlighted the risks facing the market, including the escalation of the conflict in the Middle East and the potential impact of high inflation and interest rates.
However, the report noted that the market’s resilience is supported by the strong financial position of major developers, who have robust revenue backlogs and good liquidity buffers.
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