The real estate market in Dubai continues to grow despite global challenges. This year’s first quarter ended quite strongly as the industry gained 43.2k transactions worth AED115 billion.
The month of June in particular achieved excellent figures. With 8,850 transactions worth AED 22.10 billion, it even broke a 13-year record. With such massive numbers, it recorded growth of around 41% compared to June last year.
And in the following month of July, the average housing cost rose 9.9% annually, with villa costs rising 17.8% and housing costs rising 8.7%. Each month the cost of villas increased by 0.8% and apartments by 1% in July. Despite the typically subdued summer activity, sales in the city’s residential sector were buoyant in July. 6,524 units were sold this month, up more than 50.8% year-on-year.
The statistics above really show that the real estate market is booming and that it will remain completely unaffected by global obstacles. Dive deeper into the stats provided by Dubai’s largest real estate agent.Luxusimmobilien.com“ in the last few months also makes it clear that the demand for these properties has surprisingly increased.
Therefore, let us learn more about the unprecedented demand for residential property for sale in Dubai.
Off-plan properties vs. move-in-ready units
Research by the real estate industry has shown that buyers are particularly interested in spacious and comfortable living spaces in sparsely populated regions. This is one of the main reasons why ready made properties are in such high demand as opposed to off plan units.
Another factor that has shifted buyers’ focus to finished or secondary properties is cost. Off-plan property prices are steadily increasing, prompting potential buyers to look to the second homes instead.
In fact, these objects show a higher growth rate than finished units. As a result, those on tight budgets are now more likely to look for second homes. But on the other hand, investors continue to prefer off-plan properties because of the benefits they offer.
Opulent real estate on the rise
Palm Jumeirah property for sale continues to enjoy popularity due to the availability of opulent homes. The region is still gaining interest from elite buyers and investors, despite high costs. The cost of villas for sale in Palm Jumeirah is up 51% in the last year and 68% since the pandemic began.
A similar trend is being followed in other neighborhoods offering luxury properties for sale in Dubai. For example, the cost of villas for sale in Dubai Hills Estate and District One increased by 30% in the last year. Insatiable global demand has pushed up luxury rental costs by a staggering 70.3% in the last year.
But the warning about this enviable growth is that the average transaction cost in these desirable neighborhoods is AED2,900 per square foot. This makes the city one of the most affordable, opulent housing markets in the world. Plus, it’s cheaper than the more desirable areas of London or New York.
Depending on the latest real estate trends, the city’s real estate is expected to double in market share this year. The limited supply of opulent homes will also lead to higher demand. With the rising trend of the elite class, millionaires and entrepreneurs making Dubai their home, demand is expected to continue to rise in the second quarter of the year.
It is estimated that around 4,000 elite individuals will relocate to the emirate in 2022, and a major credit to this is the city’s expat-friendly policies. The reformed company property law is also attracting great interest from entrepreneurs.
Villas vs Apartments
Considering the statistics on the success of companies this year, apartments are definitely a winner in the competition with villas. The introduction of new villas is also restricted, unlike apartments. According to records, only 3.6% of the total planned villa projects will be realized this year. As a result, the cost will be on the expensive side.
Even if the newest communities with townhouses and villas are planned in the emirate, the handover is not expected until the end of 2024. As a result, apartments for sale in Dubai continue to enjoy higher demand.
The comparatively budget-friendly cost is another reason why quality investors and buyers are attracted to the apartments. Additionally, a host of innovative amenities and services that accompany them proves they are a worthy preference for many.
The changing dynamics in the rental market
This year has also seen changing dynamics in the city’s rental market. Some regions are seeing an increase in rents, while others are seeing a decrease. But the average cost of renting apartments and villas has increased by 21.2% and 24.7% respectively in the last 1 year. Currently, the average cost of renting apartments in the city is AED 85,204. Apart from that, the villas come with a rental cost of AED 255,000 per year.
Among those that have seen an increase, Palm Jumeirah happens to be at the top for apartments. Their average rental cost has increased to AED 218,413. Rentals in Discovery Gardens have seen a 4.9% increase, followed by Downtown Dubai (4.3%), Jumeirah (4.3%) and Living Legends (4.8%).
Arjan, Dubai International Financial Centre, The Greens, Liwan, Business Bay and Festival City are the other notable neighborhoods where apartment rents have boomed. But The Old Town, Green Community and Deira are the regions where apartment rental costs have fallen.
For villa rentals in the city, Jumeirah Islands and Emirates Hills saw larger increases, each up 4.9%. It was followed by Victory Heights (4.6%), The Sustainable City (4.8%), Mudon (4.3%) and Jumeirah Golf Estates (4.3%). The Springs, The Meadows and Green Communities have seen a drop in villa rental costs in the emirate.
All in all, the Emirates property market is expected to continue to develop in the second quarter of the year and beyond. Opulent real estate and villas will continue to dominate, with apartments also growing.