Dubai Real Estate Strong now but WATCH those offplan apartments!

Let’s talk about one of the hottest topics around! Since December 2020, we’ve seen a surge in residential property prices, hitting new highs as recently as February 2024. It’s been a wild ride, and if you’re in the market or just keeping tabs, there’s a lot to digest.

Where We Stand Now

The good news: Townhouses & Villas are performing exceptionally well. If you’ve been considering one, these are holding strong, and there are still options. But there are some potential bumps in the road, especially when it comes to off-plan apartments.

A Quick Look Back

This isn’t Dubai’s first rodeo. We’ve seen a few cycles, and with each one, the market has matured. The government has been fantastic at implementing reforms that make the market more resilient; golden visas & letting foreigners own 100% of their businesses —these have made Dubai even more attractive for long-term investments and living.

What’s Driving the Market

The current boom really kicked off in early 2021. Dubai’s fast, efficient handling of the COVID-19 situation made it a go-to spot for high-net-worth individuals (HNWIs) looking for a safe, sunny place to call home. Plus, Dubai’s strong international ties have brought in a wave of newcomers, especially from Russia, Ukraine, and China and more recently the ever turbulent political climates in Europe and USA too.

The Off-Plan Frenzy

Off-plan sales are where things get interesting. We’re seeing a lot of speculative buying, with some apartments often selling out in hours. That’s great for developers, but it’s a bit of a red flag for the market as supply is outstripping demand in recent months. Historically, off-plan sales have been a bit of a double-edged sword—they can drive growth, but they can also lead to market corrections if things cool down too quickly, especially given the number of units that will all hit the market 2-3 years from now. Will demand for these keep up with supply?

Just to give you some numbers, off-plan sales have been dominating the market, accounting for 35% more volume than ready properties since Q4 2022, and about 5% more in terms of transaction volume. But with payment schedules looming, the market could see some shifts. If too many investors decide to cash out before those payments are due, we could see a rush to sell that might put downward pressure on prices, particularly for those off-plan apartments.

Here’s something important to note: we’ve got very few townhouses and villas in general in Dubai but with a high demand for them. Everyone wants a house with a garden now, especially since more and more families are moving to Dubai. They simply don’t want apartments anymore—they’re all looking for that extra space, and it’s creating a real shortage in the market. Meanwhile, demand for apartments has dropped significantly just recently in the last few months. Families want a home where the kids can run around, and that’s pushing up prices for larger properties while the apartment market cools down certainly from an End User point of view but equally future tenants who need more space too.

This surge has mostly benefited the luxury and family homes market. But as we’re seeing, the growth in demand has been so strong that it’s pushing up prices across the board, leading to some concerns about sustainability—particularly in the off-plan apartment segment.

So, When Will We Peak?

Everyone’s wondering when this market is going to hit its peak. If we look at previous cycles, the timeline suggests we could be heading for a peak sometime between late 2024 and 2025, especially with those off-plan properties in the mix and the majority being apartments.

But remember, real estate is a long game. Even if the market cools a bit, Dubai’s fundamentals—like safety, quality of life, tax-free and its strategic location—are rock solid. So, while we might see some softening in the off-plan apartment sector, especially if payments start coming due and investors get jittery, houses and more established properties should continue to do well.

In short, if you’re in the market for a house, you’re in a good spot. Just keep an eye on those off-plan apartments if you’re thinking about buying one of those. As always, it’s all about timing and making sure you’re getting the best value for your investment.

Happy house hunting!

Lucy Parker is a RERA licensed agent with 13 years of experience selling Dubai real estate both offplan and secondary markets in apartments, townhouses, villas and mansions. She also guides clients on renovation projects and more recently has also helped investors purchase in the Emirate of RAK where the Wynn Casino will be coming shortly. Please follow her on IG: lucyjparker_ and her YT channel ( Lucy J Parker ) to learn more.

Whatsapp Lucy on +971 5857 11 070 to ensure you find the right property. ( French and Spanish spoken )