Following the first 3 months of the year where residential property prices increased by an average of 0.61% on a monthly basis, prices have jumped 1.45% in April, the largest
month-on-month increase since October last year. Dubai property values currently stand at AED 1,125 per sq ft according to the Property Monitor Dynamic Price Index (DPI). These values were last seen in December 2016 when the market was falling, and were previously reached during an earlier upward cycle in January 2014. Prices now sit just AED 109/- from the peak of the last market cycle.
The total volume of sales transactions dipped in April, decreasing by 34.6% month-on-month to 8,043 sales. While a substantial decrease of this magnitude would typically ring alarms bells of a market correction commencing, it follows a month which saw a similar level increase of sales being recorded—the 4th highest of all time—which is more likely the anomaly and driven by end of quarter filings. Additionally, shortened working hours and vacation periods owing to the holy month of Ramadan typically result in a reduction in transaction activity and at this stage we see no cause for concern and anticipate sale transaction volumes to remain buoyant. Residential transactions, encompassing apartments, townhouses, and villas, accounted for the majority at 89.8% (7,222 sales transactions). The highest transacted commercial property types were hotel apartments (4.87%), office spaces (2.4%), and land sales (1.8%).
In April, a total of 3,864 off-plan Oqood transactions were registered, marking a 40.6% month-on-month decrease in volume, and seeing Oqood transactions lose their majority market share, now representing 48.0% of the market. Meanwhile, Title Deed sale volumes also witnessed a decline falling by 27.9% yet gaining market share and now accounting
for 52% of all sales transactions. Although the market may appear to be slightly tilted in favour of completed properties over off-plan, a correctional adjustment by the Property Monitor team for registration technicalities within the Dubai Land Department (DLD), reveals that several villa and townhouse sales, presented as completed with issued Title Deeds, are indeed under construction and sold off-plan. In reality, off-plan transactions have held a dominant market share since Q4 2021, currently standing at 55.4%.
New off-plan development project launches remain in high gear with just shy of 4,500 off-plan units added to the market for sale at an anticipated combined gross sales value of ~AED 17.9 billion. Apartments represent 88.4% of this new inventory by volume, while townhouses and villas represent 10.7% and 0.9% respectively. Year-to-date new project launches have exceeded 29,000 units and more than AED 86 billion in aggregate sales value. With several additional projects already in the planning stages for many developers and the overall continued strength of the new development market, we anticipate that close to 90,000 new units will have entered the market by the end of the year thereby increasing the total overall housing supply by a further 10%.
Meanwhile, resales transactions—any subsequent sale of a property that follows the initial first-time sale from the developer, for an off-plan or completed project—stood at 3,590 in April representing a market share of 44.6%, increasing 3.9% month-on-month. With this increase in overall resale activity, the portion of off-plan resales continued to decrease—down 0.9% in April—falling to 21.4% after reaching a high of 28.3% in February this year. Off-plan resale activity at this level is something that can be viewed positively, indicating that there is a moderate amount of speculative or flipping activity which is not aggressively driving the market upwards.
After reaching an all-time record high last month, the volume of mortgage transactions declined by 43.1% in April with a total of 2,424 loans recorded. The sudden drop in mortgages is not surprising and is directly related to the increased bulk mortgage activity witnessed in March. This drop now brings the monthly volume back in line with the 12-month moving average of 2,397. Bulk mortgages—those taken by developers and larger investors with multiple units—still comprise the majority share of the market at 39.3% (down 15.7% MoM).
The 953 loan transactions were spread across several projects, most notably portfolio mortgage registrations for apartments in Mirdif Hills (528), and villas at Cedre Villas in Dubai Silicon Oasis. Meanwhile, refinancing and equity release also increased their market share, growing by 8.6% to 30.7%. The remaining 30.0% (up 7.1% from last month) of loans taken were new purchase money mortgages with the average amount borrowed being AED 1.72m at a loan-to-value ratio of 77.1%.
Average gross rental yields for residential properties in the Emirate continued to remain stable as a whole in April, increasing by just 0.01% to 6.7%. However, when analysed at the property type level there is a clear split between multi-family and single-family properties, with the latter under ongoing downwards pressure resulting in yields for both townhouses and villas decreasing by 0.04% and 0.23% respectively. Meanwhile, yields for apartments saw a small increase of 0.06%. Villa yields now stand at their lowest level in nine months. Their continued decline can be attributed to multiple factors, the most significant of which is that rental rates have reached their peak in several mature communities, with renters now opting for newer communities where handovers have recently started bringing much needed new singlefamily rental supply to the market.