Realtors: Dubai Expects Further Moderate Increase in Real Estate Prices

There are no signs of speculative activity in the market yet.

What happened? Last month, the increase in property prices in Dubai continued, but compared to January it was 0.58%, which is the lowest monthly growth since July 2022. Such a situation undoubtedly finds a positive response from buyers. According to the Property Monitor (DPI) dynamic price index, the cost per square meter of residential real estate in Dubai currently stands at AED 11,857 ($3,228), which is equivalent to the level of December 2013 when the market was on the rise.

Dynamic. In this market cycle, the overall price growth has reached 30.5% relative to the November 2020 lows, which is an average increase of 0.60% per month this year, 0.92% in 2022 and 1.33% in 2021. Such dynamics can be considered a positive sign, especially when compared to the previous cycle, when the increase was on average 1.6% per month for two years, and then in September 2014, prices sharply peaked. Currently, the values are 10.7% below the previous market maximum, and experts believe that if the rates remain at current levels, the growth period prior to reaching peak levels will be more prolonged compared to 2014.

February showed a decrease in the overall sales volume by 8.2% to 9,128 transactions, but it still became the most successful February in the history of the market, overshadowing last year’s record by an overwhelming 43.8%.

Quote. According to Nikita Kuznetsov, founder and partner of one of the largest real estate brokerage firms in the UAE, Metropolitan Group: “The slowdown was inevitable and expected, as the monthly volume indicators have steadily risen over the last two quarters.”

The real estate market has been buzzing with activity in recent times, and February 2023 was no different. According to the latest data, there were a total of 4,551 real estate transactions registered during the month. While this represented a 10.2% drop from the previous month, it was a whopping 76.7% increase from the same period last year.

Interestingly, the market seems to be evenly split between unfinished and finished properties. However, the exact breakdown shows that unfinished properties account for 58.9% of the market.

In contrast, resale transactions, including both completed and unfinished projects, accounted for 46.3% of the market, with a total of 4,230 transactions recorded in February. This represented a 9.1% increase from the previous month, and the number of resale transactions involving unfinished properties continues to grow, reaching 28.3% in February.

Experts agree that this type of resale activity is an important indicator to watch during periods of market growth, as it can be a sign of speculative activity. Nikita Kuznetsov echoes this sentiment, stressing that the focus is currently on properties that will be completed within a year. However, if activity shifts towards properties that are further from completion, caution is advised as speculators may be looking to inflate prices quickly, which might not reflect market value when the property is eventually sold.

Meanwhile, new development projects continue to launch at a steady pace, with apartments accounting for 78% of all new lots, while villas and townhouses make up 11.3% and 10.7%, respectively.

Overall, the real estate market remains a dynamic and evolving sector, with plenty of opportunities for buyers and sellers alike. By staying up to date with the latest trends and data, it’s possible to make informed decisions and secure the best possible outcome.