Market outlook: Where and how to invest in Dubai in 2024

The Dubai property market continues its upward trajectory into 2024, having already demonstrated remarkable resilience and growth over the past year.

According to a recent study, the real estate market in Dubai is expected to expand by about 15% this year. Dubai’s real estate sector, accounting for more than half of the GCC’s transactions (worth $171.6 billion in 2023), is set to continue leading the regional property market in 2024.

This optimistic forecast is buoyed by supply constraints, escalating demand from pivotal markets such as China and India, and an expanding appeal among a diverse range of investor demographics.

Knight Frank’s recent report anticipates a 5% surge in property prices in prime locales like The Palm Jumeirah and Emirates Hills, accompanied by a 3.5% growth in other segments.

While this signifies more moderate growth compared to 2022 and 2023, it underscores Dubai’s position as a lucrative real estate investment hub, offering impressive yields between 5 to 7%.

This trend reflects the city’s continued allure in the global real estate landscape, promising robust returns for discerning investors in 2024. Dubai’s population growth, economic diversification, and positive economic forecasts further bolster the market’s potential.

Average market outlook for Dubai 2024

  • Capital appreciation: anticipated at 5% annual growth
  • Rental yield: projected at 5%

The remarkable 19% year-on-year increase in average residential property prices in the third quarter of the previous year, has culminated in a 30% rise since 2020. Additionally, the real estate value transacted in Dubai increased by almost 57% year-on-year over the first 10 months of 2023, indicating strong market activity and investor confidence in 2024.

Now we’re into 2024, it’s evident that Dubai’s post-pandemic market resurgence remains rooted in solid economic foundations, moving beyond the initial ‘race for space’ phenomenon that drove villa prices back in 2020. 

Key government initiatives, notably residency permits for retirees and remote workers, as well as the expanded 10-year Golden Visa programme, have significantly contributed to revitalising the residential market. These policies have spurred the highest quarterly price increase in over a decade and further solidified Dubai as a globally attractive market for diverse investor profiles.

Types of Dubai property to consider in 2024

Prime residential properties in 2024

Investors targeting high-end real estate should look to prime locations like The Palm Jumeirah, Emirates Hills, and Jumeirah Bay Island. These areas are projected for a 5% price increase in 2024, offering lucrative opportunities for those eyeing luxury real estate at the pinnacle of the Dubai property market. Dubai continues to lead the way as the world’s busiest market for luxury homes, with sales for homes worth $10 million or more reaching a record 277 in the first nine months of 2023, totalling $4.91 billion of transactions.

Throughout 2023, the market exhibited a distinctive pattern, with investor interest more heavily weighted towards the higher and lower ends of the property spectrum. 

Attractive submarkets, including Business Bay, Dubai Marina and Downtown Dubai are expected to maintain their allure in 2024, further cementing their status as investment hotspots.

Emerging areas in 2024

Dubai South is emerging as a focal point of growth, particularly for apartments. As we closed 2023, this area saw an extraordinary 73% annual increase in property prices, signalling a robust investment opportunity.

Other regions like Jumeirah Lakes Towers and Umm Suqeim Third are also on the rise, mirroring similar trends of significant growth. These areas, with their developing infrastructure and growing appeal, represent promising opportunities for investors seeking to capitalise on emerging markets within Dubai.

Attention should be given to the evolving landscape of these neighbourhoods, as they offer a blend of residential and commercial prospects. This balance is especially appealing to a broad spectrum of investors and residents, highlighting Dubai’s dynamic and diversifying real estate sector.

Villas in 2024

Villas continue to spearhead capital growth in Dubai’s real estate market, while apartments remain a lucrative option for higher yields. 

For villa investments, Jumeirah Islands and Dubai South have shown remarkable value increases. Jumeirah Islands experienced a 65% annual rise in villa prices, a significant indicator of its investment potential. Dubai South, already noted as an apartment hotspot, also saw villa prices soar by 33% in just the third quarter, demonstrating its dual appeal in both market segments.

2024 Dubai property outlook: How to navigate change

In 2024, Dubai’s real estate market is expected to maintain its growth trajectory, though at a more moderate pace. This environment presents investors with consistent opportunities amid a steady demand-supply imbalance. Key factors underpinning this outlook include progressive government initiatives such as reduced transaction fees and extended residency visas, with the aim of bolstering foreign investment within the residential sector.

On the commercial front, Dubai’s stature as a prominent business hub remains strong. Recent amendments to commercial laws are set to further attract foreign investments. The shift towards flexible office spaces, including co-working areas and serviced offices, is likely to continue, meeting the evolving requirements of modern businesses.

Dubai property trends for 2024

Sustainability and technology integration

In light of the COP28 summit, Dubai’s real estate sector is increasingly embracing sustainability and technology. The shift towards eco-friendly and energy-efficient buildings is becoming prominent, with developers integrating sustainable practices into their projects. This momentum aligns with the UAE’s commitment to achieving Net Zero by 2050, bolstered by the Dubai 2040 Urban Master Plan, positioning the emirate as a leading destination for sustainable and future-centric real estate projects.

The real estate landscape is also being shaped by technological advancements. The adoption of blockchain for secure transactions and smart home systems for enhanced living experiences continues to contribute significantly to the sector’s growth and appeal. 

Commercial real estate evolution

Dubai’s standing as a premier business hub is further solidified by recent amendments to commercial laws, poised to draw more foreign investments. The trend towards flexible office spaces, such as co-working areas and serviced offices, aligns with changing business needs and is expected to continue.

Drawing parallels to other prime property markets like San Francisco and London, the integration of working hubs and hot-desking offices within residential complexes has proven to add significant value. This global trend suggests potential growth areas for Dubai’s commercial real estate sector.

Affordable housing initiatives

The focus on affordable housing is intensifying, and Dubai property developers are likely to focus on more affordable housing options that cater to a growing middle-class population. This shift aligns with government strategies, such as reduced transaction fees and the introduction of long-term residency visas, which are expected to significantly boost foreign investment in the residential sector, particularly in mid-range housing options. This trend reflects a strategic move to diversify Dubai’s housing market, ensuring it remains accessible and appealing to a wider range of investors and residents. 

2024 risks and growth factors

While 2024 shows positive market prospects, it’s not without risks, including the potential impact of a global economic slowdown and regional tensions. Yet, the continued undersupply, especially in prime neighbourhoods, suggests a steady demand from investors. This imbalance may keep the market stable, even as it navigates uncertainties.

Our guide discusses the market’s increased maturity and the relatively low risk of a crash.

Investors should note that towards the end of 2023, Dubai’s average property price matched a decade-old peak, reshaping investor perceptions.

With prices now at parity with 2014 highs, the initial surge in asking values may stabilise, and the first half of 2024 could be opportune for acquisitions before the market fully adapts to these elevated price levels. 

Strong tailwinds heading into 2024 for Dubai property

2023 set new records in Dubai’s real estate market. Up to October, there were 93,590 residential transactions, surpassing the 2022’s total of 92,178 – the previous highest – with two months to spare.

Property prices also saw a significant increase, rising over 19% by October. For investors deciding between apartments and villas, it’s noteworthy that apartment values rose by 18.7%, while villas increased by 21.4%.

Rental performance was equally robust in 2023, with average rents in Dubai climbing by 19.7%, reflecting the market’s overall strength and momentum heading into 2024. In fact, it’s estimated that Dubai real estate rents could jump by up to 20% this year

Dubai inflation for 2024 and beyond

The International Monetary Fund forecasts a 10.8% inflation rate for the UAE over the next five years, which equates to an average annual increase of 2.2%.

Although the economic relation between general inflation and property inflation is complex and not linear, Dubai’s inflation rate presents unique implications for the real estate market:

  • While inflation often supports capital appreciation, it is more likely to lead to increased rental rates.
  • Inflation reduces the real value of debt, which could boost Dubai’s mortgage market and lead to more property purchases.
  • A 2 to 3% inflation rate is typically indicative of a strong, stable and growing economy. 

Supply and demand for Dubai real estate 2024

The final and perhaps the most important performance indicator is the balance of supply and demand.

Dubai’s construction pipeline, excluding branded residences, is set to deliver 77,864 homes by 2028. This equates to an annual average of around 13,000 homes over the next six years – a figure that’s notably lower than past completion rates.

While concerns about oversupply persist among new investors, industry experts largely view the risk as minimal. Their perspective is that the city remains undersupplied, particularly in prime neighbourhoods and higher-priced segments, and is a situation compounded by the anticipated population growth and government initiatives. 

Investing in Dubai real estate in 2024

As we enter 2024, the Dubai real estate market still presents a compelling opportunity for investors.

Factors such as market stability, positive growth forecasts, and proactive government initiatives fuel the market’s attractiveness. Investors should thoughtfully consider both prime and emerging areas, while staying abreast of evolving market trends in order to fully leverage Dubai’s increasingly mature real estate landscape. 

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