Dubai’s thriving real estate market has reached a significant milestone, with its residential sector notching up its highest quarterly capital gains in a decade. The boom in demand for properties in the emirate has been a driving force behind this impressive growth.
The ValuStrat Price Index (VPI), which covers Dubai’s residential market, soared by an impressive 6.1 percent on a quarterly basis during the third quarter. Villa and apartment prices showed substantial increases, with villas rising by 7.6 percent and apartments by 4.8 percent within this period. On an annual basis, the index climbed by an astounding 15.1 percent, with villa and apartment prices surging by 19.8 percent and 11 percent, respectively.
The villa segment witnessed remarkable capital gains during the quarter in areas such as The Palm Jumeirah, Jumeirah Islands, Dubai Hills Estate, and Mudon. Meanwhile, in the apartment category, Discovery Gardens, The Greens, The Palm, and Dubailand Residence Complex were the standout performers. Even prime properties have not been left behind in this spectacular growth trajectory. Prime property valuations experienced an annual increase of 16.5 percent and a quarterly uptick of 6.6 percent.
According to government data, Dubai’s economy expanded by an impressive annual rate of 3.2 percent in the first half of 2023, reaching Dh223.8 billion ($60.9 billion), driven by the stellar performance of the transport and storage sector. During Q3 2022, Dubai recorded 11,308 ready or secondary home sales transactions, marking a remarkable increase of 17.7 percent compared to the same period last year. This translated to investments worth Dh26.4 billion. The average ticket size for ready-to-move-in properties witnessed a slight annual decline of 1.4 percent, falling to Dh2.3 million, with 41.5 percent of all ready home sales priced under Dh1 million.
Notably, there were 52 home sales worth more than Dh30 million during the three-month period, compared to 67 in the third quarter of the previous year, according to the report. The citywide average transacted price for ready units during the third quarter was Dh14,077 per square meter (Dh1,308 per square foot), reflecting an annual increase of 7.8 percent. The majority of transactions occurred in popular areas like Jumeirah Village, Dubai Marina, Business Bay, Downtown Dubai, and International City.
The buoyancy of the residential rental market was equally evident in the third quarter, with residential asking rents in Dubai rising by 27.2 percent compared to the same period the previous year. Villa and apartment rents registered substantial annual growth rates of 38.7 percent and 19.1 percent, respectively. With a surge in developer completions, the market welcomed an estimated 53,715 new build units this year. In the first nine months of 2023, the market saw a total of 21,507 apartments and 2,068 villas completed, equivalent to 44 percent of preliminary estimates for the entire year.
Notably, office sales transactions also witnessed a substantial year-on-year growth of 9 percent during the third quarter, reaching a median transacted price of Dh11,140 per square meter, marking a 28.4 percent annual increase. In terms of sales volume, Business Bay retained its position as the most popular choice for office sales, commanding a share of about 44.5 percent, closely followed by Jumeirah Lakes Towers with 33 percent of overall transactions.
The continuous surge in Dubai’s real estate market is indicative of the emirate’s sustained economic vitality and its standing as a prominent global real estate destination.