Dubai’s Residential Market Booms with Record Off-Plan Sales
A recent industry report reveals a significant surge in the demand for off-plan homes in Dubai, with the Emirate witnessing a 41.6% month-on-month increase in new contract registrations in May. This surge resulted in over 10,000 transactions, representing 69.4% of total residential sales.
The ‘ValuStrat Price Index – Dubai Residential Capital Values’ highlighted a remarkable 76.3% year-on-year increase in off-plan registrations for residential properties, with areas such as Jumeirah Village Circle and Meydan One driving the heightened demand.
Discovery Gardens and Dubai Hills Estate set new benchmarks in May for the highest number of off-plan homes sold in a single month.In parallel, the volume of ready home transactions grew by 8.1% year-on-year and saw a 45.9% increase since April. The majority of these sales were concentrated in Jumeirah Village Circle (8.3%), Business Bay (6.6%), Dubai Marina (5.9%), Downtown Dubai (5.3%), and Jumeirah Lake Towers (3.9%).
Notably, 16 transactions for ready properties priced over 30 million UAE dirhams were completed in prestigious areas such as Palm Jumeirah, Dubai Marina, Jumeirah Bay Island, Emirates Hills, and District One.
Capital Values
Despite the impact of Dubai’s record rainfall in April, which caused flooding in several communities, the strong demand for residential properties prevented any significant decline in home valuations. According to ValuStrat, villa capital values continued to rise at a steady rate in May, with Palm Jumeirah properties experiencing an annual increase of 41.7%. Other areas with substantial annual gains included Jumeirah Islands (41.1%), Dubai Hills Estate (37.5%), Emirates Hills (32.5%), and The Lakes (32.1%).
Most established villa communities in Dubai have surpassed their previous capital value peaks from 2014. Remarkably, Palm Jumeirah became the first apartment area to exceed its previous peak this month.
Apartment prices increased by 1.8% in May, a slight uptick from April’s 1.6%, culminating in a 22.4% annual growth rate. The areas with the highest annual apartment capital gains were Discovery Gardens (34%), The Greens (32.6%), Palm Jumeirah (30.9%), Al Quoz Fourth (29.1%), and The Views (28.1%).
The ValuStrat Price Index report also noted a correlation between rising average prices per square foot and shrinking average home sizes in Dubai, which has raised concerns regarding property valuations.
Conclusion
Dubai’s residential market is experiencing a robust boom, driven predominantly by off-plan sales. The significant increases in both off-plan and ready home transactions indicate a strong demand for residential properties despite recent challenges such as flooding. As capital values continue to rise and set new records, the market shows resilience and growth. However, the trend of shrinking average home sizes alongside rising prices per square foot warrants close monitoring to ensure sustainable property valuations in the long term.
