The Dubai property market, known for its cyclic ups and downs, has investors and analysts closely monitoring its trajectory as we approach 2024. Past growth spurts and subsequent slowdowns have left some wary about the potential for a market crash.
However, a more in-depth analysis of recent trends and broader economic indicators suggest that the Dubai property market is heading towards a more mature and sustainable growth phase, instilling confidence in investors for the year ahead.
Forecasts expect continued growth in 2024
In short, most analysts are predicting the Dubai property market to continue to perform over the next 18 months. Property prices will continue to rise albeit at a slower pace than the past 3 years. That said, Dubai is still expected to outperform most other prime property markets around the world in the short to mid-term.
- 2-4% capital appreciation forecast for Dubai 2024
- 5-10% Rental rises forecast for Dubai 2024
- 2-3% GDP rise forecast for Dubai 2024
The 3rd Dubai real estate growth cycle: A more sustained performance
Analysing the recent trends in the Dubai property market provides valuable insights into its potential performance in 2024. Over the years, the market has displayed a more sustained pattern of growth, indicating a maturing phase rather than speculative booms.
Looking back at the transaction volumes and total values from 2019 to 2023 provides an encouraging picture:
- 2019: The market saw 41,000 real estate transactions, totaling AED 81 billion.
- 2020: Despite global challenges, 52,000 real estate transactions were recorded, with a total value of AED 175 billion.
- 2021: The market experienced a notable rebound with 60,000 real estate transactions, totaling AED 150 billion.
- 2022: The positive momentum continued to accelerate, reaching 120,000 real estate transactions, with a total value of AED 500 billion.
- 2023 (trending): Early indications point to consolidation with an estimated 120,000 real estate transactions, amounting to another staggering AED 500 billion total value.
These figures demonstrate a consistent upward trajectory, with transaction volumes and values experiencing notable growth each year.
The fact the 2023 trend suggests a consolidation on 2022s 100% growth, underscoring the market’s resilience and demand dynamics despite global headwinds that have impacted other investment markets in the world. For context, the London prime real estate market is expected to undergo a period of contraction this year.
Drivers of the current Dubai property market resilience
Several factors contribute to the positive sentiment surrounding the Dubai property market in 2024:
- Strong non-oil sector performance: The UAE’s economy has shown solid growth in Q1 2023, primarily driven by the robust performance of the non-oil sector. While the oil segment experienced moderation due to OPEC+ agreements, the non-oil sector remains a key driver of economic expansion. This diversification reduces the market’s dependency on oil revenues, making it more resilient to fluctuations in the energy market.
- Diverse economic tailwinds: The UAE’s economic strength and competitiveness have garnered international recognition, positioning it as one of the top 10 most ‘competitive’ countries in the world. This global recognition fosters investor confidence and can attract foreign capital into the real estate sector. Additionally, the government’s proactive approach to investment and consumption has resulted in a significant fiscal surplus, creating a favourable economic environment for growth.
- Government initiatives: The UAE government’s efforts to boost investments and consumption have yielded positive outcomes, with measures such as reduced transaction fees and long-term residency visas stimulating foreign investment in the residential real estate market. The broader Golden Visa program, offering extended visas and sponsorship for families, is expected to attract more long-term investors and residents to the UAE, further bolstering the property market by driving demand for homes. In fact, the total population of Dubai is expected to by from just over 3.5 million now to close to 6 million by 2040.
- Rebounding oil GDP: After a moderation in 2023, the oil GDP growth is projected to rebound to 3.5% in 2024, contributing to overall economic growth and bolstering the real estate market. While the UAE’s economy is increasingly diversified, oil remains a crucial component, and its projected rebound adds to the positive economic outlook.
Demand dynamics and new project launches in Dubai
The demand for residential properties in Dubai has remained robust, driven by both local and international investors. In 2022, a remarkable total of 62,200 apartment units were transacted, representing 68% of the overall transaction volume. The allure extended to villas and townhouses, experiencing a substantial 48% year-on-year surge in demand.
Notably, off-plan projects have been a driving force behind the strong transaction activity. In 2022, close to 57% of the transaction activity was concentrated on off-plan projects, reflecting developers’ confidence in the market’s potential.
New project launches have also surged, witnessing a remarkable 73% increase in 2022. A total of 35,900 units were launched, comprising 71% apartments and 29% villas and townhouse developments.
This influx of new supply indicates the market’s buoyancy and developers’ anticipation of continued demand, but it also accounts for the expected maturity in price growth 2024 is forecast to display.
Positive mid-term outlook for Dubai property
Taking into account the positive economic indicators, strong investor sentiment, and a more mature market, there is a compelling case against the likelihood of a market crash in Dubai’s real estate sector in 2024. Instead, the market seems well-positioned for continued growth and opportunities. In fact, the market is now exhibiting signs that it is a much more robust investment, akin to London real estate than its previous incarnations.
However, it is essential to acknowledge that real estate investments always carry inherent risks, and market dynamics can evolve over time.
Therefore, investors should exercise due diligence, consider their risk tolerance, and seek expert advice before making investment decisions. Nonetheless, the forecast for the Dubai property market in 2024 appears promising, driven by a combination of robust economic fundamentals, strong demand dynamics, and favorable government initiatives. The market’s resilience and diversification, along with the projected rebound in oil GDP, provide a positive outlook for the future of Dubai’s real estate market.