Dubai Off Plan Property Market Performance Q2 2024

The most recent report from Better Homes states that Dubai saw 25,466 off-plan transactions in Q2 2024, valued at over AED 52 billion. This equates to an 81% year-on-year increase in volume and 76% growth in value compared to Q2 2023. Needless to say, a market expanding at such top speed offers very interesting prospects.

The villas segment spearheaded the charge, with off-plan sales transactions jumping 44% yearly, and the total value surging 76%. It was followed by apartments, with an 86% annual increase in volume.

So, what's driving this out-of-the-box performance? The center of this whole thing is Dubai's rising appeal, which has gone on to implement effective programs in long-term residency, foreign ownership laws, and various stimuli like the Dubai 2040 Master Plan. As expected, demand is rocketing from investors and end-users, which the developers are cashing in on by aggressively launching projects.

Here's a breakdown of how the off-plan market has evolved over the last year:

Clearly, 2024 is shaping up to be a watershed year. As an investor or homebuyer, you stand to gain from entering the arena now before prices climb further. Let's delve deeper into the factors steering Dubai's off-plan ascent.

Rising Activity in Designated Freehold Areas

Over 70% of Dubai's upcoming residential supply is concentrated within designated freehold zones like Dubai South , Jumeirah Village Circle (JVC), Dubai Hills Estate, and Mohammed Bin Rashid City.

The high density of off-plan projects in these areas spotlights a strategic trend—developers expanding outward from the main city in line with the Dubai 2040 Urban Master Plan. Besides aligning with the city's future blueprint, these zones allow foreigners to acquire freehold properties , explaining their popularity.

As an investor or end-user, targeting off-plan purchases in freehold areas allows you to obtain full ownership while benefiting from future development and capital appreciation.

Evidently, freehold areas are expanding rapidly. Getting in early through off-plan buys lets you capitalize before prices climb further.

Developers Launch 200+ Projects

Another growth catalyst is the sheer volume of new off-plan launches by developers seeking to plug demand. Comparing figures again reveals the scale of fresh launches:

Q2 2023 vs Q2 2024: Off-Plan Project Launches

With double the projects launched in Q2 2024, you have far greater options to cherry-pick investments. Capitalize on attractive payment plans, discounts, amenities etc. offered for off-plan purchases.

Rising activity isn't surprising given developers' swelling project pipelines. Emaar alone plans to invest $6.8 billion over the next decade. Considering exponentially growing demand, your off-plan property should deliver handsome returns when completed.

Let's walk through the upsides of buying off-plan more clearly.

Why Buy Off Plan Property in Dubai Now?

Purchasing off-plan investment properties in Dubai's current market climate offers multiple advantages:

• Attractive Payment Plans: Developers offer flexible monthly/quarterly plans, reducing upfront capital requirements. This allows you to get onboard even with limited budgets.

• Discounts & Value Adds: Developers provide discounts up to 15-20% on off-plan purchases to accelerate sales. You also get value promotions like free air tickets, property management, rental guarantees etc. Capitalize on these to maximize ROI.

• Below-Market Entry Prices: As Dubai’s property prices continue rising with insatiable demand, buying off-plan allows entry at lower price points before future appreciation.

• High Leverage Potential: Off-plan properties typically appreciate 30-40% from project announcement to completion. You can hence take advantage of significant capital gains and rental income even by leveraging through mortgage financing.

Let's assess indicative metrics to quantify potential earnings:

Illustrative Off-Plan Investment in Dubai

Details Inputs

• Property Price AED 1,000,000
• Down Payment (25%) AED 250,000
• Mortgage (75%) AED 750,000
• Interest Rate 4%
• Appreciation on Completion (35%) AED 1,350,000
• Gross Rental Yield 7%

Returns:

Year 1-2: Pay Interest and Mortgage Instalments Through Rental Income

Year 3: Refinance/Sell After Completion for ~AED 900,000 Profit

Clearly, buying new off-plan projects offer potentially lucrative returns compared to completed properties. The key is entering at the earliest stages to maximize gains.

Dubai's upcoming mega-projects like the Dubai Creek Harbour and Emaar's Dubai South further ignite growth prospects. Let's assess price trends to gauge where the market is heading.

The uptrend in Property Prices

Average property prices across Dubai have witnessed an 18% surge in Q2 2024 compared to last year. This uptick comes amidst strong demand-supply dynamics and underscores the growth runaway Dubai's real estate market is experiencing.

As an investor or end-user, it's vital to enter before appreciation steepens further. Off-plan provides the perfect avenue to buy-in at discount before completion.

Here's an overview of how prices have risen over the past year across segments:

Dubai Average Property Prices (AED per square foot)

The growth indicators are unambiguous—Dubai property values are rising steadily. Buying off-plan allows you to lock-in upcoming projects at reasonable prices before market movements push values further out of reach. Let's assess sales prices in some popular off-plan areas more closely

Average Prices in Key Off-Plan Areas (AED per square foot)

Apartment

Villa

Evidently, new areas like Dubai South, Dubailand etc. offer relatively affordable pricing currently. However, given the scale of developments planned, prices are certain to inflate further over the next 3-5 years. Getting in early is key to maximizing gains.

Who's Buying Off Plan Property?

Dubai's off-plan market attracts a wide spectrum of investors chasing capital growth and rental yield. For context, let's analyze the split across buyer categories:

Clearly, investors dominate transactions, enticed by Dubai's stable rental yields, tax-free framework, and property appreciation potential.

The city's buy-to-let market is expected to touch $30 billion over the next decade. As an investor, buying new off-plan properties allows you to target this demand most cost-effectively.

End-users are equally keen to capitalize on incentivized payment schemes to purchase future homes. Dubai's improving quality of living, stability, and infrastructure keep attracting expats, wealthy retirees, families etc.

Let's analyze the split across nationalities more closely:

Nationality-wise Off-Plan Buyer Split

Rank Nationality

1 Indian

2 British

3 Russian

4 Italians

5 Pakistanis

Indians, Brits, and Pakistanis dominate the buyer mix, enticed by close ties and growth prospects. However, an interesting trend is the rising influx of Chinese and Russian investors.

This again confirms healthy foreign interest, which you can target through offshore marketing campaigns when reselling off-plan properties post-handover.

Off Plan Apartment Price Brackets Dominating Transactions

The off-plan apartment market caters to a diverse investor profile, with a range of budget segments witnessing activity, but apartments priced below AED 2 million made up a substantial 71% share of total off-plan transactions in Q2 2024. This highlights the important role of affordable and middle-income housing within Dubai's property expansion.

After this, apartments in the AED 1 million to 2 million range followed with a 36% share of transactions, led by areas like International City, Dubailand, and Jumeirah Village Circle. Luxury off-plan apartments over AED 10 million accounted for just 1% of transactions, signaling lower appetite for ultra-high-end units.

The table outlines the breakdown of off-plan apartment transactions by price bracket:

Affordability and accessibility remain the main factors attracting investors to off-plan apartments. However, the broad range of price segments indicates the market caters to varying investment budgets and goals.

Villa Price Brackets Seeing Maximum Off-Plan Demand

For off-plan villas, the AED 2 million to 5 million price bracket witnessed the highest activity, capturing a 75% share of total villa transactions in Q2 2024. This price segment provides investors with spacious and amenitized housing in thriving communities without entering the ultra-luxury space.

Areas like Dubailand, Jumeirah Village Circle, Dubai Sports City , and nearby outskirts offered attractive options in this price range. The sub AED 2 million and AED 5 million to 10 million brackets followed with a 13% and 21% share of transactions, respectively.

The preference for mid-range villas highlights budget-consciousness among investors drawn to Dubai's expanding suburbs and new master-planned developments.

The table shows the split of off-plan villa transactions across price ranges:

While the high-end luxury market remains active, most investors targeted options meeting their budget constraints and rental income goals during Q2 2024.

Key Takeaways

Dubai's off-plan segment has continued its gravity-defying growth in 2024, establishing new records across metrics like volume, value, launches etc.

As an investor or end-user, the abundance of options and incentives should compel you into action before the market overheats.

In closing, here are the key takeaways:

• Transactions reached ~25,500 in Q2 2024, rising 81% yearly
• Average property prices rose 18-24% across apartments and villas
• 201 new off-plan projects launched, adding 49,700 units
• Leverage payment flexibility discounts to enter this thriving ecosystem
• Focus on designated freehold areas given the concentration of new supply
• Draw exit plans targeting rising investor demand from China, Russia etc.

The numbers speak for themselves—it’s arguably the best period to invest in or purchase property in Dubai. Plot your entry strategy immediately to build your dream asset portfolio in this global oasis.