Dubai Property Sales Soar as Mortgage Activity Rises and Off-Plan Market Expands - Market Report

Dubai Property Sales Soar as Mortgage Activity Rises and Off-Plan Market Expands

The Dubai real estate market demonstrated resilience and significant growth in September, marking a record-breaking month in sales transactions and mortgage activity. With a steady influx of off-plan project launches and moderate price appreciation, the market remains on a trajectory of substantial year-on-year growth. Here’s an in-depth look at the current landscape:

Median Property Prices in September

• Average Property Price: AED 2,762,888
• Price Appreciation: 1.14% month-on-month increase

September marked a moderate pace in property price appreciation, aligning with Dubai's current market cycle trend. After a higher-than-average increase of 2.48% last month, price growth returned to the market cycle average of 1.23%, demonstrating steady market confidence. This fluctuation aligns with Dubai’s unique dual real estate market, which consists of ready properties transacting consistently and the off-plan segment, where sales spike with new project launches.

According to the Property Monitor Dynamic Price Index (DPI), Dubai property prices grew 1.14% in September, now standing at AED 1,448 per square foot. This figure is 17.4% above the previous peak in 2014, culminating in a 57.9% market cycle growth since the low in 2020.

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Sales Transactions Reach Record High

• Total Sales: 18,038 transactions (+11.7% month-on-month)
• Residential Sales: 95.1% of transactions, led by apartments, townhouses, and villas
• Commercial Sales: Dominated by office spaces (1.9%), vacant land (0.95%), and hotel apartments (0.9%)

The volume of sales transactions hit a historic high in September, positioning the market on course for nearly 30% year-on-year growth. With cumulative 2024 transactions nearing 170,000, Dubai’s market is set to quadruple pre-COVID trading volumes by the year's end. This sustained activity reflects the UAE’s forward-looking government initiatives and Dubai’s appeal as a global real estate investment hub.

Off-Plan Market Performance

• Off-Plan Market Share: 72.8% of all transactions
• New Off-Plan Project Launches: Over 13,500 units, valued at approximately AED 60 billion
• Residential Inventory Composition: 83.5% apartments, 14.1% townhouses, 2.4% villas

With high absorption rates and increasing market share, off-plan projects dominated in September. The Dubai Land Department recorded a 12.9% increase in Oqood transactions month-on-month, securing a substantial share of the market at 65.5%. Resale transactions—sales following an initial developer transaction—decreased by 1.2% month-on-month, with off-plan resales comprising 25.9% of this segment. The rise in off-plan resales, particularly within one year of completion, will be monitored closely as this trend could indicate speculative behavior.

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Mortgage Market Recovery and Growth

• Mortgage Volume: 4,183 registrations (+16.6% month-on-month)
• Average Mortgage Amount: AED 1.73 million, with a loan-to-value ratio of 76.6%
• Mortgage Type Breakdown: 44.4% new purchase, 34.5% refinancing, 21.1% bulk mortgages

The easing of interest rates across both variable and fixed-rate mortgages contributed to a 16.6% rise in mortgage registrations, making September the second-highest month on record for mortgage transactions. The majority of mortgages were issued for new purchases, while refinancing and bulk mortgage activities held steady. Significant bulk mortgage transactions occurred in developments such as La Perla Blanca in Jumeirah Village Circle and Ikarus Tower in Dubai Production City.

Market Outlook for Q4 2024

Dubai’s real estate market is expected to maintain positive momentum, driven by consistent demand and increased transaction volumes. However, to prevent overheating, it is essential that monthly price increases remain around 1% or less. Should growth surpass 2%, concerns about excessive speculation could arise.

The widening gap between off-plan and completed property sales may continue, with developers introducing competitively priced projects that appeal to a diverse pool of investors. As the off-plan resale market grows, particularly with properties nearing completion, there is a potential for increased flipping activity, which could impact both supply and pricing.

The ready property segment may experience a rise in demand as mortgage rates ease; however, sellers are advised against adopting aggressive pricing tactics that might deter buyers. The current environment presents an ideal opportunity to leverage buyer interest effectively, ensuring sustainable market growth and long-term value in Dubai’s dynamic real estate landscape.

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Dubai Real Estate Market Highlights: September 2024

• Property Price Growth: +1.14% to AED 1,448/sq ft
• Highest-Ever Transaction Volume: 18,038 sales
• Off-Plan Market Dominance: 72.8% of transactions
• Record Mortgage Registrations: 4,183 loans, second-highest in history

The Dubai real estate market achieved remarkable growth in September 2024, setting new records across various metrics. Notably, property prices and sales transaction volumes reached unprecedented highs, driven by robust off-plan sales and a resurgence in mortgage transactions following interest rate adjustments. Market dynamics indicate a blend of mature and emerging trends, with price growth stabilizing at a moderate pace.

Key Highlights

1. Median Prices and Property AppreciationMedian Price: AED 2,762,888Month-on-Month Growth: Property prices appreciated by 1.14% in September, bringing them in line with the broader market’s average growth rate of 1.23%. This increase followed an earlier high growth rate in August of 2.48%.Price Per Square Foot: Dubai property prices rose to AED 1,448 per square foot, an increase of 17.4% over the previous peak in 2014.
2. Record Sales TransactionsTransaction Volume: Reaching 18,038 transactions, marking an 11.7% increase from August 2024. This figure sets an all-time record for the highest monthly transaction volume in Dubai real estate history.Market Share of Off-Plan Sales: Off-plan transactions now account for 72.8% of the total market, underscoring the strong interest in new developments.
3. Mortgage Transaction SurgeIncrease in Mortgage Activity: Following lower interest rates, mortgage transactions rose by 16.6%, with 4,183 loans recorded. This marks the second-highest level in recorded mortgage activity.
4. Developer Dominance and Project HighlightsEmaar Properties led the off-plan market with 20.5% market share, attributed to high sales across projects like Golf Point in Emaar South.DAMAC Properties captured 18.3% of off-plan transactions, driven by townhouse sales in their new DAMAC Riverside development.Sobha Group secured 10.3% market share, primarily through the Riverside Crescent buildings in Sobha Hartland.

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Property Price Index and Market Trends

According to the Property Monitor Dynamic Price Index (DPI), Dubai real estate prices continued their upward trajectory in September:

• DPI Increase: The index rose 2.20 points from August to September, a month-on-month increase of 1.14%, bringing the current DPI value to 202.15.
• Historical Context: The current price per square foot (AED 1,448) stands 84.5% above the market low of April 2009 and 17.4% higher than the 2014 peak. These metrics reflect a 43-month streak of year-on-year price increases, with annual growth of 16.5% as of September 2024.

Transaction Breakdown

The market experienced significant variation between off-plan and resale transactions:

• Off-Plan Transactions: Representing 68.6% of total sales, off-plan transactions have driven the market, with developers like Emaar Properties and DAMAC leading with new project launches.
• Resale Transactions: Resale transactions accounted for 31.4% of the market, slightly declining month-on-month but showing a strong base of demand.

Leading Master Developments

1. Jumeirah Village CircleInitial Sales: Leading with 9.7% of new sales, popular projects included One Park Central and Binghatti Phoenix.Resale Sales: Representing 9.3% of resales, with notable sales at Binghatti Corner.
2. DAMAC Hills 2Market Share: 8.4% of new sales, with top-performing projects Violet 1 and Elo 2.
3. Sobha Hartland IINew Sales: Accounted for 6.7% market share, primarily from the Riverside Crescent series.

Off-Plan Development Launches

New off-plan development launches remain strong, adding over 13,500 units in September with a combined anticipated sales value of AED 90 billion. Apartments comprised 83.5% of this inventory, while townhouses and villas made up 14.1% and 2.4%, respectively. The diversity in the price range is a shift from 2023, where the market was skewed toward luxury and ultra-luxury offerings.

Mortgage Market Insights

Interest rate adjustments positively impacted mortgage transactions:

• Loan Volume: A notable increase in loan registrations, reaching 4,183 in September.
• Loan-to-Value Ratios: Average borrowing was AED 1.73 million, with a loan-to-value ratio of 76.6%.
• Developer and Bulk Mortgages: Bulk loans, particularly for portfolios in La Perla Blanca and Mana Residence 1, comprised 21.1% of September’s mortgage market.

Market Outlook for Q4 2024 and Beyond

Dubai’s real estate market is on track for a strong close to 2024:

• Annual Transaction Growth: Projected to reach 170,000 by year-end, a near 30% increase from 2023.
• Moderate Price Appreciation: Expected to remain within 1% month-on-month, ensuring steady but not overheated growth.
• Demand for Ready Properties: Likely to rise as mortgage rates ease, though sellers should remain mindful of pricing strategies.

With over 250 new projects in the pipeline and a commitment to maintaining a balance between new launches and resale market stability, Dubai's real estate sector appears well-positioned for continued growth into 2025. The city’s strategic initiatives and investor-friendly policies continue to distinguish it globally, reinforcing its stature as a leading real estate market.

The AED 1m-1.5m price tier saw the fastest market growth in September, rising by 2.2% to capture 18.9% of the market. This increase is largely due to successful launches of mid-range apartments, such as Lagoon Views in DAMAC Lagoons and Sobha Orbis in Motor City, where average sales prices were AED 1,722 and AED 1,890 per sq ft, respectively. Lower-mid apartments at Golf Point in Emaar South, priced at an average of AED 1,402 per sq ft, also contributed to the growth in this tier. Conversely, the AED 3m-5m price tier dropped by 4%, reducing its market share to 12.8%.

Additionally, the AED 1.5m-2m price tier grew by 1.9%, driven by off-plan sales of low-category townhouses at Violet in DAMAC Hills 2 (AED 778 per sq ft) and upper-mid and high-quality apartments at Club Place in Dubai Hills and Riverside Crescent in Sobha Sarang, averaging AED 2,161 and AED 2,474 per sq ft, respectively.

When grouped into broader segments, the AED 1m-3m mid-tier continues to dominate, representing 53.3% of the market—up by 5.3% month-on-month. Lower-price tiers (properties under AED 1m) rose by 1.1%, now making up 28.8% of the market, while high-end properties (over AED 3m) dropped by 6.4%, comprising 18.2% of the market.

Methodology and Metrics

• Dynamic Price Index (DPI): The DPI uses a moving average algorithm and the Dutot price index formula, excluding outliers. Monthly indices may be revised if new data becomes available.
• Completed Transaction: Includes resales recorded on the Dubai Land Department’s Title Deed register for properties with a Building Completion Certificate (BCC).
• Gross Rental Yield: Annual rent as a percentage of property purchase price or value, presented as a blended average across all communities in Dubai.
• Highest/Lowest Recorded Sale: Refers to the apartment or villa transactions that achieved the highest or lowest sales prices during the month, in either off-plan or resale categories.
• Median Price Per Sq Ft and Median Sales Price: The midpoint price per sq ft and sales price among all transferred residential apartments, townhouses, and villas, typically a more accurate metric than averages as it mitigates the impact of outliers.
• Off-Plan Property Transaction: Transactions recorded in the Dubai Land Department’s interim register (Ogood) for properties still under construction or yet to be completed, covering initial sales and any subsequent transfers until a BCC is issued.
• Price Tiers: Transactions are categorized into nine price tiers based on transfer prices, with values exactly on the tier’s upper limit included in the higher bracket.
• Resale: Any sale after the first-time transaction from the developer, regardless of the property’s completion status or registration type.