Following the recent spike in price appreciation witnessed in March and April, Dubai’s property prices returned to more modest price growth, recording a gain of 0.69% in May. According to the Property Monitor Dynamic Price Index (DPI), Dubai property prices currently stand at AED 1,360 per square foot, 10.25% over the previous all-time high and market peak of September 2014.
Sales transaction volumes soared 47.7% in May to a total of 17,139 transactions. First thoughts may lead one to assume that this monthly uptick is a result of pent-up demand from reduced trading days in April due to the historic rains and weeklong public holiday break for Eid al-Fitr, however daily transaction activity already rebounded once the ability to transact was restored and any backlog of transactions most likely were already accounted for during April. The impressive growth in May is more a story of the ongoing evolution and seemingly insatiable demand for properties in Dubai, with evidence of both significant purchase activity from UAE residents and international investors.
Investor activity being heavily skewed towards off-plan projects, while residents are largely split between the off-plan and ready property segments, with many opting for an off-plan project due to lack of affordable inventory for sale, coupled with a white hot rental market that has seen rental prices more than double in some communities postpandemic. In May, residential transactions, encompassing apartments, townhouses, and villas, accounted for the majority of sales at 92.8% (15,905 transactions). The highest transacted commercial property types were hotel apartments (2.6%), office spaces (1.9%), and retail units (1.4%).
In May, 10,598 off-plan Oqood transactions were recorded, a monumental increase of 47.1% from the previous month yet a negligible 0.2% slide in market share to 61.8%. Meanwhile, Title Deed sale volumes also witnessed a similarly impressive increase, growing by 48.6% and now accounting for 38.2% of all sales transactions. While Oqood transactions are generally used to measure the off-plan market, several villa and townhouse sales are presented in the Dubai Land Department data as being issued with Title Deeds and as completed properties— instead of being under construction and sold off-plan. After adjusting for this technicality, off-plan transactions secure an even larger market share of 66.7%.
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 5,650 in May. This represents a market share of 33.0%, increasing by 0.5% month-on-month, driving initial developer sales market share down slightly, and likely temporally, to 67%.
New off-plan development project launches surge to reach record highs, with just over 15,500 off-plan units added to the market for sale with an anticipated combined gross sales value of ~AED 41.4 billion.
This sets a new record for the highest number of units launched in a single month with apartments representing 75.1% by volume of this new inventory. The remaining 24.9% was for single-family units—townhouses 19.4% and villas 5.5%—almost double their yearto-date market share of 12.6% and led by launches in new master communities of Athlon by Aldar, Riverside by DAMAC, and Palmiera 2 by Emaar. Year-to-date, new project launches have exceeded just over 59,500 units and are well on track to surpass last year’s ~96,000 units. Expect the fierce pace of project launches to continue, with a summer slowdown unlikely. Gauging by recent land acquisition and project planning activities, keep an eye out for new opportunities across various pricing segments in a variety of communities, particularly: Meydan Horizon, Jumeirah Garden City, The Valley, and Motor City.
Mortgage transaction volumes increased by 57.9% in May with a total of 3,359 loans recorded–the second highest level trailing only March 2023. Loans taken for new purchase money mortgages accounted for 53% (down 2.8% from last month) of borrowing activity, with the average amount borrowed being AED 1.85m at a loan-to-value ratio of 76.6%. Meanwhile, loans for refinancing and equity release saw their market share decrease by 9.5% to 29%. The remaining 18% (up by 12.3% from last month) was due to bulk mortgages—those taken by developers and larger investors with multiple units. The 605 bulk loans issued for the month were spread across several projects, most notably portfolio mortgage modifications at Bluebell Residence (98) in Jumeirah Village Circle and portfolio mortgage registrations at Residence 17 at The Residences at District One, MBR City.
Despite the ongoing relatively high interest rate environment, borrowing activity remains strong and is not a deterrent for any of the mortgage market segments. We anticipate that mortgage volumes will remain consistent in the coming months with a slight dip leading into Q4 in anticipation of a rate decrease on the horizon at either the November or December US FOMC meetings. Once there is an easing of interest rates, bulk loans and refinancing activity should see even greater volumes and see new records set.
As we edge closer to the end of Q2 and with the summer months ahead, we anticipate that the market will continue with high transactional activity and experience little to no negative impact of what has somewhat historically been a slower period. With Ramadan and the Eid breaks moving earlier in the Gregorian year, the double punch of summer vacations and the holy period —which added to historic seasonality—will be mitigated. While we do not expect the market to slow overall, the divide between off-plan and completed property sales may widen further, in part due to the robust off-plan project pipeline and in part due to unescapable seasonal net migration of Dubai residents escaping the summer heat.
