Investing in Dubai Real Estate in 2024: Market State, Forecasts and Promising Projects

In recent years, the Dubai real estate market has recorded unprecedented levels of deals and volumes. Both residential and commercial properties in the emirate now offer high investment potential. This is due to several factors: a stable political climate, favourable conditions for obtaining a golden visa, population growth, infrastructure development and rental yields that can exceed 9% per annum.

Market Development in 2023

The results of 2023 were impressive. The total value of sold residential real estate reached AED 31.455 billion (USD 8.564 billion), surpassing the 2022 figures by 49.7%. A total of 118,011 housing transactions were completed, marking a 36.4% increase from the previous year.

On an annual basis, the average cost per square metre increased by:

• 17% for villas under construction;
• 22% for ready-to-move-in villas;
• 0.6% for apartments in buildings under construction;
• 4.6% for apartments in ready-to-move-in buildings;

A total of 33,700 transactions involved mortgage financing, representing a 41% increase compared to 2022, while the total loan amount decreased by 7%, amounting to AED 125 billion (USD 3.403 billion). Rental incomes grew by 14.5% year-on-year, reaching AED 35.97 billion (USD 9.79 billion).

The overall transaction volume was the most impressive indicator. As per DXB Interact portal data, this figure grew by 56% year-on-year, reaching AED 412 billion (USD 112.17 billion), setting a record for the Dubai market.

Market Condition in 2024

Summarising the data for Q1 2024, the Dubai Land Department (DLD) reported the sale of 36,506 properties during this period, marking a 17.5% increase compared to the first three months of last year. The total value of sold properties rose by 21.9% year-on-year to AED 108.5 billion (USD 29.54 billion). The primary segment (18,754 sales) slightly outperformed the secondary segment (17,752 sales) in terms of the number of transactions.

A total of 8,676 transactions involved mortgage financing, a 32% increase compared to Q1 2023, with the total loan amount rising by 52% to AED 47.8 billion (USD 13 billion). The average cost per square metre in the first three months of this year was AED 16,135 (USD 4,393), a 16.7% increase from the same period in 2023, setting a record for the last decade.

In April, 11,608 properties were sold, 45% more than in April of last year but 13.5% less than in March 2024, when 13,434 properties were sold. The total transaction value rose by 21.5%, reaching AED 32 billion (USD 8.71 billion).

A total of 7,611 transactions involved off-plan properties, accounting for 68% of all signed contracts. The total value of these transactions was AED 16.21 billion (USD 4.41 billion). The remaining 3,584 transactions, with a total value of AED 8.72 billion (USD 2.37 billion), were in the ready-to-move-in sector. The high demand for off-plan projects is driven by their rapidly rising prices. Properties purchased at the excavation stage can be resold upon completion with a profit of up to 30%.

Mortgages were used 2,180 times, 10% fewer than in April of last year. However, the volume of mortgage loans increased by 31.9% to AED 14.6 billion (USD 3.98 billion).

Compared to the same period last year, the average price of all types of properties in April 2024 increased, amounting to:

• AED 1.3 million (USD 350,000) for apartments (+13.7%)
• AED 3.4 million (USD 930,000) for villas (+25.8%)
• AED 1.2 million (USD 330,000) for commercial properties (+39.9%)
• AED 41 million (USD 11.2 million) for land plots (+27.6%)

The average cost per square metre was AED 16,480 (USD 4,487), a 19.8% increase year-on-year, setting a record high for the past decade.

Rental rates also rose. In April, the average annual rental cost for apartments reached AED 74,000 (USD 20,150), a 23.3% increase from the same period last year. For villas, this figure was AED 170,000 (USD 46,290), a 21.4% increase.

Analysts predict that by the end of 2024, Dubai developers will deliver 25,000 new properties. Most of these will be built in areas such as Business Bay, Dubailand, MBR City and Jumeirah Village.

Commercial Real Estate Sector

Statistics show that in recent years, the commercial real estate sector in the emirate has been developing slowly. However, in Q1 2024, it showed positive dynamics, evidenced by increased investor interest and a growing number of leasing deals.

Despite the global economic slowdown due to rising inflation and worsening political climate, Dubai continues to leverage its strategic location and attractive business environment. This ensures a steady influx of new investments and foreign professionals. As a result, leasing volume in the first three months of this year grew by 28% compared to the same period in 2023.

DXB Interact data showed that 967 commercial property transactions were concluded in Q1, a 94% increase from the same period last year. The total transaction value was AED 19 billion (USD 540 million). In April, 277 properties were sold for a total of AED 4.704 billion (USD 1.28 million), marking an 82% year-on-year increase.

Innovative infrastructure projects, large-scale events and new areas like Expo City, created on the site of Expo 2020, will contribute to the further development of the commercial real estate market.

In Q1, several hotels opened, providing a total of 2,000 new rooms, primarily 5-star establishments located in popular areas of Dubai such as Business Bay, Za’abeel and Port Saeed. To date, the total number of hotel rooms in the emirate is 155,000.

The retail sector also anticipates the opening of new facilities. Experts predict that by 2025, Dubai and Abu Dhabi will add 120,000 square metres of new retail space.

Luxury Housing Sector

The luxury housing sector in Dubai is one of the fastest-growing in the world, with growth of 44.4% in 2022 and 16.3% in 2023. Demand for premium properties worth over USD 10 million remains high. In 2023, the total transaction volume for such properties was USD 7.6 billion, surpassing London and New York. In Q1 2024, 105 luxury housing transactions were registered, a 19% increase compared to the same period last year.

A notable feature is that the cost of luxury real estate in Dubai is significantly lower than in other major cities. For example, in the emirate, you can find housing with an area of about 100 square metres for USD 1 million. In London, New York and Singapore, properties in this price category typically range between 31 and 34 square metres.

Another advantage for the emirate is that developers design projects not only with living spaces but also with additional amenities such as pools, gyms, saunas, massage rooms, yoga rooms, spas, playgrounds, shops, restaurants, coworking spaces and more.

As per British analysts, high demand in the luxury housing sector in the emirate is expected to lead to a 5% market growth in 2024.

Best Areas for Real Estate Investment

The average annual rental yield for Dubai real estate reached 6.3% in the first three months of 2024. The most profitable areas for studio segments were:

• Jumeirah Lake Towers: 9.07%
• Al Furjan: 8.41%
• Jumeirah Village Circle: 8.38%

The highest returns in the 1-bedroom apartment segment were demonstrated by:

• Jumeirah Village Circle: 8.24%
• Arjan: 7.31%
• Al Furjan: 7.29%

In the 2-bedroom apartment segment:

• Jumeirah Village Circle: 7.63%
• Dubai Marina: 6.67%
• Al Furjan: 6.51%

Finally, in the 3-bedroom apartment segment:

• Jumeirah Village Circle: 7.34%
• Dubai Marina: 6.86%
• Downtown: 5.83%

In April of this year, the fastest growth in the cost per square metre was seen in the following areas:

• Mudon: AED 15,000 (USD4,100), a 38.6% annual increase;
• Damac Hills: AED 16,000 (USD 4,400), a 30.1% annual increase;
• Al Wasl: AED 30,000 (USD 8,200), an 18.6% annual increase;
• Jumeriah Village Circle: AED 14,000 (USD 3,800), an 18.2% annual increase.

Real estate in these communities is in demand among investors interested in capital growth.

Promising Projects

Experts consider the following off-plan projects to be the most investment-attractive:

• Dubai Islands: Offers apartments, villas and townhouses located near well-maintained beaches. The area will also feature shopping centres and 5-star hotels;
• Dubai Hills: A community with well-developed infrastructure, including Dubai Hills Park and a large 18-hole golf course. The residential part will be built up with apartment buildings, villas and townhouses.
• Palm Jebel Ali: Relaunched last year, this attractive project covers an area twice that of Palm Jumeirah. Its apartments and luxury mansions will accommodate 35,000 families. In addition to housing, over 80 hotels and other amenities will be built on the artificial archipelago. The project is scheduled for full completion by 2040, but the first properties are expected to be delivered by 2027;
• Dubai Creek Harbour: Covering an area of 24 square kilometres, this project includes 10,000 residential units and 500,000 square metres of public amenities. It’s located near the Ras Al Khor Wildlife Sanctuary, attracting tourists with a large population of pink flamingos and other local fauna;
• Rashid Yachts and Marina: The project aims to transform the Mina Rashid area into a comfortable living and leisure space, offering apartments, duplexes and townhouses. The community will also feature shopping centres, parks, cafês, a yacht club and a floating hotel.

Zarina Nasimova shared the most common mistakes investors make in Dubai real estate:

Forecasts and Prospects

In April, the emirate experienced the heaviest rainfall in the history of meteorological observations in the country since 1949. The rainfall lasted about one day. The destructive consequences of the downpour prompted the local government to begin work on improving the drainage system.

Analysts believe natural disasters will not significantly reduce the demand for real estate in Dubai. While demand may drop slightly in locations most affected by the downpour, such a decline is likely to last only a few months.

As per the Dubai 2040 state project, the emirate’s population is projected to grow to 5.8 million by 2040. Currently, it stands at 3.68 million. Given the expected growth rates, approximately 54,400 residential units should be added to the Dubai market annually. However, analysts note that local developers will be able to deliver only 200,000 units over the next five years. This low supply level will lead to increased demand for real estate in the emirate.

Factors Affecting Market Growth

Market analysts highlight several factors influencing the Dubai real estate sector:

• Loyal policy towards foreigners: The emirate’s government is keen to attract foreign investments, leading to the emergence of new freehold zones where foreigners can own property unconditionally;
• Visa for investment programme: Investments starting from AED 750,000 (USD 204,000) can qualify for resident status for two years;
• Expo 2020: The international exhibition, which ended in March 2022, influenced infrastructure development and increased the emirate’s investment attractiveness in the eyes of foreigners;
• Developed tourism industry: Under the UAE Tourism Strategy 2031, UAE hotels are expected to accommodate 40 million tourists by 2031;
• Sustainable development and innovation: The use of innovative technologies and "green" materials by Dubai developers attracts buyers who prefer eco-friendly real estate;
• Digital technologies: Virtual property tours, cryptocurrency payments and market analysis using AI have already become commonplace in the emirate’s market;
• Rising demand for luxury housing.

Zarina Nasimova mentioned several additional factors contributing to the positive development of the Dubai market:

• High level of safety;
• A wide selection of international universities providing quality education;
• Favorable tax system;
• Stable exchange rate of the UAE dirham against the dollar and euro;
• Pleasant climate attracting tourists all year round.

Expert Predictions

Experts predict further growth for the Dubai market. Bas Kooijman, CEO and Asset Manager of DHF Capital S.A. believes that the emirate’s real estate sector will grow by an additional 5% in 2024, while the country’s economy is expected to grow by 4.5%.

British analysts forecast a 3.5% growth. Potential risks include a slowdown in global economic growth, rising inflation and increasing bank rates, negatively impacting demand.

Zarina Nasimova asserts that real estate will increase by 5-15% this year. Although this is not as much as in 2022 and 2023, it will indicate market stabilisation.

Hussain Sajwani, Founder and Chairman of Damac, noted that all key projects are witnessing a stable number of deals and demand continues to grow steadily. Last year, his organisation launched 20 new projects in the emirate, demonstrating confidence in Dubai’s economy. He believes that all current economic trends indicate healthy development in the real estate sector, with government measures attracting foreign investments and population growth having a significantly positive impact.

Mahmoud Kreidie from BSA law firm is less optimistic. He believes that the market may soon stop growing and warns that increased supply levels could lead to sectoral decline and price drops.

However, most analysts are not concerned about an oversupply, given the emirate’s population growth.

Mahmoud Kreidie also added that favourable investment conditions are expected to be maintained in the foreseeable future. Traditionally, summer will become a lull period when property prices decrease. Subsequently, properties are expected to appreciate due to rising living costs, attracting investors looking for long-term capital growth.

Conclusion

The impressive growth indicators of 2022 and 2023 have not changed the dynamics into 2024. Property prices in Dubai are still rising, driven by an increasing population, high demand for luxury housing and attractive long-term visa arrangements.

At the beginning of the year, analysts predicted a potential market downturn due to several negative factors. However, in Q1, the number of transactions increased by 17.5% and the total value by 21.9%.

Most experts agree that property prices will rise by 5% in 2024. Some suggest this figure will apply only to the luxury housing sector, while the entire market is expected to see a 3.5% growth.

There’s a high likelihood that the summer lull will lead to a price correction, followed by continued price increases due to rising living costs in the emirate. This season is expected to be a profitable period for investors interested in long-term capital growth.