Buy or Rent Apartments in Dubai? Top Performing Real Estate Areas Revealed
The Dubai real estate market is experiencing unprecedented activity, with residential property sales reaching AED191bn ($52.5bn) in the first half of 2024. This represents a 38 per cent increase compared to H1 2023, according to a report by Espace Real Estate.
Apartment Price Surge
Dubai apartment prices have surged by an average of 17 per cent over the past year, with rents climbing by more than 20 per cent. Notably, certain neighbourhoods have witnessed even more dramatic increases. For instance, Jumeirah Village Circle (JVC) saw a 30 per cent rise in apartment prices, Jumeirah Lake Towers (JLT) recorded a 28 per cent increase, Jumeirah Beach Residence (JBR) experienced a 24 per cent hike, and Downtown Dubai saw prices climb by 22 per cent. Conversely, Palm Jumeirah Apartments and Emaar Beachfront saw more modest increases of 5 per cent and 7 per cent, respectively.
Market Dynamics and Trends
There is a notable trend of new residents renting for their first one or two years before becoming buyers to set down longer-term roots for business and lifestyle reasons. This pattern helps absorb a large number of newly completed properties. For example, Downtown Dubai saw the completion of three new buildings in 2023, with over 550 new rental contracts registered in these buildings alone in the first half of 2024. This rapid absorption of new supply is a positive sign for the market.
Rental Market Insights
The average rental price for apartments increased by 22 per cent in H1 2024 compared to H1 2023. Some apartment communities experienced even faster rent increases, such as Bluewaters Island (+79 per cent), JBR (+19 per cent), and Palm Jumeirah (+24 per cent). While there is expected to be a surge in rental supply in 2025 and 2026, 80 per cent of this supply will be apartments, which typically accommodate smaller households. Consequently, the projected population growth required to absorb this supply may be overestimated.
Demand Pools and Future Outlook
It is essential to note that residential supply must appeal to three distinct and growing demand pools: population growth (residents), exclusive use second home/holiday home buyers, and investors targeting the rising tourist market through managed holiday home investments.
Is it Time to Buy?
Given the significant price and rent increases, potential buyers and investors might consider entering the Dubai real estate market now. The current dynamics suggest strong demand and rapid absorption of new supply, indicating a robust market with promising returns. However, individual decisions should be based on thorough research and consideration of long-term goals.
Reference: Arabian Business
