The Dubai Real Estate market, while continuing to demonstrate strong performance, is beginning to show signs of stabilizing, according to Cushman & Wakefield Core‘s Q2 2024 market update.
The real estate agency noted that although the market is holding steady across several key metrics, the growth rate is decelerating, particularly in the secondary residential market, which is gradually shifting towards a stabilization phase.
In the second quarter of 2024, there was a noticeable decrease in the number of properties handed over to buyers, though a significant surge is expected in the latter half of the year.
Dubai’s Real Estate Stabilization
Property prices in Dubai have now risen for the 16th consecutive quarter, with an impressive 21% annual increase. Ultra-prime properties, especially, have performed exceptionally well, with over 300 homes selling for AED 20 million ($5.4 million) or more between April and June.
However, despite the ongoing price increases, Cushman & Wakefield Core highlighted emerging signs of a market slowdown.
Increased Launches with Slower Handovers
The second quarter of 2024 saw a slower pace of handovers, with just 5,391 units delivered compared to over 8,350 units in the first quarter of the year. For the remainder of 2024, approximately 24,300 residential units are expected to be handed over, bringing the annual total to nearly 39,000 units—a figure comparable to the number of handovers in 2023 and consistent with current market demand.
Prathyusha Gurrapu, Head of Research and Consulting at Cushman & Wakefield Core, explained, “Growing from a high base, new project launch volumes continue to see record numbers with a 42 percent year-on-year increase, as demand and absorption remain buoyant. We have also seen developers with large landbanks initiating projects, and smaller private developers aggressively acquiring land, which continues to be a challenge to source.”
Dominance of Off-Plan Market, Stabilization of Secondary Market
Prathyusha further noted, “Until the end of 2021, the gap between off-plan transactions and secondary market transactions was minimal. However, over the past two to three years, off-plan transactions have surged, driven by the increase in new project launches. While secondary market transactions have seen moderate growth of 5%, off-plan transactions have spiked by 61%.
“In Q2 2024, off-plan transactions accounted for more than double the number of secondary market transactions, indicating a higher share of investors in the off-plan market compared to end-users.”
Emerging Signs of Market Stabilization
Prathyusha added, “Primary off-plan sales prices are higher than secondary off-plan prices across most Dubai districts and projects. Although the price difference remains in the single digits, it indicates that sellers are finding it challenging to match original prices, leading to slightly lower market values for exits. This trend is worth monitoring as more off-plan supply enters the market in the coming quarters.”
Other signs of market stabilization include an increasing number of sales listings with no change in listed prices during the first half of 2024, and a significant reduction in the number of listings with price increases compared to the same period last year. Additionally, since Q3 2023, the median residential listing price has decreased by an average of 7% quarter-on-quarter, further indicating market adjustments.
Prime Dubai Real Estate
While city-wide sales prices have continued their upward trend for the 16th consecutive quarter, with a 21% year-on-year increase, Cushman & Wakefield Core reported that prime districts have experienced relatively modest price increases. In contrast, mainstream and affordable districts are seeing sharp increases, significantly impacting affordability.
Dubai Real Estate continues to be a strong global ultra-prime market, with more than 305 residential properties sold for over AED 20 million ($5.4 million) in Q2 2024, marking a 12% year-on-year increase. Despite this, there has been a notable slowdown in off-plan transaction volumes over the past two quarters, according to real estate experts.
Prathyusha commented, “This slowdown is primarily due to the reduced off-plan inventory available in the market for these ticket sizes. That said, secondary market ultra-prime transactions have maintained steady activity levels, with 135 transactions—the highest number of secondary market ultra-prime transactions ever recorded in Q2 2024.”
Rising Rents as Villa Market Moderates
Cushman & Wakefield Core also noted, “We observed relative stabilization in city-wide villa rents, which have risen by 13% year-on-year, while apartment rents have increased by 22% compared to the same period last year. Household incomes are not keeping pace with rising rents, further contracting disposable incomes. There has been a higher percentage of tenants opting to renew their leases, with a 14% increase in renewals in Q2 2024. Similar to the trends in the sales market, rents in mid-market apartment districts saw the steepest rise, while prime districts experienced lower levels of increase.”
