Dubai property market is reaching for new peaks – these factors can help speed it up

Ultra-luxury real estate is one catalyst that can speed up growth, and there is more.

The UAE real estate market keeps reaching unprecedented heights, driven by a combination of strategic government initiatives and investor dynamics. In Q1-2024, sales transactions soared past 65,000, doubling Q1-2023 figures and triple those of Q1-2022.

The transacted value reached Dh186 billion, doubling that of 2022 and surpassing the Dh150 billion of Q1-2023. May 2024 alone shattered past records in Dubai, with a remarkable Dh45 billion in transactions.

However, along with rapid growth comes the looming risk of an oversaturated market. With over 95,000 units expected to be handed over by 2026, the balance of supply and demand teeters on a knife edge. Here are a set of factors that have fueled today's market and are poised to cement its sustainability despite the challenges:

Inflation: The inflationary environment has spurred investment in real estate as a hedge against devaluing currencies. Individual and institutional investors are turning to real estate as a familiar and reliable asset class to navigate inflation risks.

Dubai’s global positioning: With a comprehensive strategy and execution at every level—from infrastructure to attractive residency and tourist visa rules - and mind-blowing lifestyle attractions—Dubai has solidified its global appeal.

Ultra-luxury real estate: A new market category has emerged, attracting billionaires and ultra-high-net-worth individuals (UHNWI). Pre-COVID, Dubai had fewer than 10 ultra-luxury real estate projects; by 2026, this number is expected to increase twenty-fold. This segment is now a permanent fixture in Dubai, with properties transferring ownership among the super-wealthy.

International developers: Dubai has seen an influx of well-established international real developers who have brought their expertise and client base, introducing new investors to the Dubai market.

More real estate agents: The number of registered real estate agents has risen to 19,000, with projections to reach 23,000 by the end of the year.

Market regulations: Tens of thousands of fake online ads have been removed in Dubai, aiming to create more transparent property listings on real estate portals and social media.

Strong end-user demand: Sustainable growth in rental prices has stimulated higher rental returns, attracting more investors and encouraging end-users to purchase instead of renting.

Non-mortgage market: While rising interest rates have impacted many global markets, Dubai real estate remains unaffected because it is not heavily dependent on mortgages. This reduces vulnerability to financial market fluctuations.

The government's strategic planning and preparation are designed to outweigh and outperform the risks of oversupply. Dubai has already become one of the most attractive global destinations for tourists, business, and residency. Given the current global situation, particularly in Europe and the region, it stands out as the most qualified city to sustain and enhance its market growth.