Global real estate services provider Savills released the findings of the latest Dubai Residential Market in Minutes for H1 2023, which revealed that property transactions during the period jumped 44% from the year ago period to 57,700. The split was 46,100 apartments and 11,600 villas that were sold in H1 2023, the highest half-yearly transactions on record. When compared to the five-year average, activity levels are up by 209% in the current period.
Swapnil Pillai, Associate Director, Middle East Research at Savills, says, “Historically, the summer months in the UAE have been known to be slow as many residents travel during the school break. However, this trend seems to be changing in recent times as Dubai property continues to find favour among residents and international audiences looking for stability amid an uncertain economic environment.”
“Whilst it is still early to comment on the overall take-up during the usually slow summer period, early indicators suggest that market activity is likely to remain strong. A total of 28,400 units were absorbed across the city in Q2, recording 33% yearly growth, with apartment units taking up the major chunk.”
Off-plan is strong but ready units are preferred for villas
Activity in the off-plan segment remains strong, making up close to 53% of the units sold. The increase in off-plan transactions indicates buyer preference to delay committing to high lending rates in the current economic environment. It is also reflective of an increase in new project launches that have jumped to 27,900 units during H1 2023, compared to 24,900 units in all of 2022.
The bulk of the off-plan transactions were observed for apartments. whilst villa and townhouse developments were preferred in the ready category. A total of 67% of villa and townhouse transactions during H1 were for ready units. Damac Hills 2, Al Furjan, and Dubai Hills Estate have been popular locations for ready villa units.
Price growth continues but at a less fevered pace
Asset prices continue their upward trajectory; however, the pace of growth has slowed slightly. The double-digit price growth that was witnessed across nearly all the micro-markets throughout most of 2022 has started to taper in locations with significant handovers and planned supply. Meanwhile, price growth across established locations with limited upcoming supply and lower vacancy levels remained relatively more sustained.
Apartments in Palm Jumeirah witnessed one of the highest half-yearly price growths; on average, prices have increased by 19% compared to H2 2022. Dubai Marina (14%) and Downtown Dubai (11%) were among the other high-growth markets. Other emerging locations such as Al Furjan (9%), Arjan (6%), Sports City (8%), and Town Square (5%) have also noted a marginal increase in prices, however, upcoming supply and existing vacancy levels may dent further growth.
Villas and townhouses remained the most sought-after development type. When compared to H2 2022, capital values increased by 9% across Al Furjan, 8% across Arabian Ranches, 13% across Palm Jumeirah, and an average of 14% across developments within Springs and Meadows.
Rental values are following a similar pattern to capital value movements. Rents across more established locations near employment hubs, retail, and support infrastructure have seen double-digit price growth compared to H2 2022. However, they have remained flat or recorded a marginal movement in prices across secondary/emerging locations.
Apartment rents have spiked across established locations, given that they lagged rental growth for villas and townhouses. Rents for apartment units across Palm Jumeirah have increased by an average of 27%, Downtown Dubai by 25%, Business Bay by 21%, and Dubai Marina by 20% compared to H2 2022.
Significant upcoming supply
There are 50,000 residential units proposed for completion by the end of the year. Apartments constitute 77% of the upcoming supply in 2023, with prominent projects like Aykon City by Damac at Business Bay, and One Zabeel by Ithra, among others, nearing completion. Major villa projects in the supply pipeline for 2023 include Rukan Lofts by Reportage, and Harmony in Tilal Al Ghaf by Majid Al Futtaim.
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