Dubai Real Estate Market Report Q2 2024

In H1 2024 alone, over 74,000 property sales took place, totalling AED 191 billion. Villas saw greater demand than apartments. Rental rates increased almost everywhere. Newer projects attracted lots of interest.

The foundations look solid for ongoing growth. As Dubai expands, more launches will be key to meeting demand. Here we are going to dive into the data to decode where Dubai's property market is headed next. Let’s go to an in-depth yet engaging look at Q2 2024 and beyond.

Overview of market performance in Q2 2024

Key Metrics

Prices keep going up. Average villa prices surged 28%, while apartments rose 17%. If you are one of those who have been looking to purchase, now may be the time to act.

They accounted for 60% of all transactions, with 45,271 units sold, totalling AED 96 billion. Developers are clearly keeping busy to meet the demand.

Growth Trends

The market doesn't show any signs of slowing down. According to Gulf Business, they have recorded a surge in property values of 30% in 2024; that is serious growth!

Rentals are also recording big increases. The average rental prices of villas and apartments increased by about 22-23%. In the affordable segment, Dubai's property prices skyrocketed by up to17% in Q2 2024. Mid-tier properties also increased between 5% and 16%. In fact, the average sales price per square foot for luxury properties jumped by as much as 15%.

Residential Sales Market

Dubai's residential real estate market showed robust performance in Q2 2024. Total sales values reached AED 191 billion, up 38% year-on-year. Sales volumes also saw substantial growth, with over 74,000 transactions recorded - a 36% annual increase. Let’s analyze segment wise.

Sales Analysis by Segment

Affordable Segment

The affordable segment saw buyer interest grow for properties priced from AED 500,000 to AED 1 million. Prices for apartments in International City, Dubai South and Dubai Production City rose 1-5% year-on-year. International City prices showed the highest 7.86% increase.

However, some affordable apartment prices fell 13.5% in Dubai South and 17.4% in Dubai Production City . This could result from factors like the age of buildings and availability of amenities.

Villa sales did better, with The Valley by Emaar prices jumping 17% amid rising rents. DAMAC Hills 2 also saw a nearly 7% price increase for affordable villas.'

APARTMENT FOCUS AREA IN AFFORDABLE SEGMENT

VILLA FOCUS AREA IN AFFORDABLE SEGMENT

Mid-Range Segment

The middle-market segment covers properties priced AED 1 million to AED 3 million. It saw strong demand from buyers migrating from premium areas.

Jumeirah Village Circle grew apartment prices at 6.5%, followed by Dubai Silicon Oasis at 11%. Jumeirah Lake Towers saw the largest 39% price surge.

Mid-tier villa prices also climbed steadily. Jumeirah Village Circle and Al Furjan witnessed 8-16% increases. The Springs villa prices rose 8.5% as families sought larger homes.

APARTMENT FOCUS AREA IN MID SEGMENT

VILLA FOCUS AREA IN MID SEGMENT

Luxury Segment

The high-end segment covers ultra-prime properties priced above AED 10 million. Apartment prices here rose moderately, between 3-7% in Downtown Dubai , Business Bay and Dubai Marina. Limited new luxury supply kept prices stable.

The luxury villa segment saw stronger 9-15% growth in Arabian Ranches , Dubai Hills Estate and DAMAC Hills as demand exceeded supply . Prices appreciated most in Arabian Ranches at 14.5%.

APARTMENT FOCUS AREA IN LUXURY SEGMENT

VILLA FOCUS AREA IN LUXURY SEGMENT

Sales Analysis By Property Type

Apartment Sales

Apartment sales made up most of the transactions in Q2 2024. Overall apartment prices rose 17% on average. But there were regional variations.

JVC saw a 17% increase in average apartment prices, while Palm Jumeirah was up just 5%. This resulted from new quality supplies coming online in areas like City Walk.

Newer communities saw the strongest growth. Prices in Jumeirah Village Circle surged 30%, followed by Jumeirah Lake Towers and Jumeirah Beach Residences at 28% and 24% respectively. Proximity to amenities and upcoming infrastructure drove demand.

Villa & Townhouse Sales

Villas accounted for 18% of sales but saw higher price growth of 28% on average. Prime areas like Palm Jumeirah and Jumeirah Islands saw 19-43% price increases as limited inventory caused competitive bidding.

Well-established villa communities such as Lakes and Arabian Ranches witnessed 59% and 23% price increases respectively, amid strong interest from buyers.

New master-planned developments like Town Square and Damac Hills also saw rates climb 22-43% as new supply was absorbed.

Top Areas for Off-Plan Sales

• For affordable off-plan apartments, Dubailand, Dubai South, and Dubai Investment Park saw the most interest.

• Mid-range buyers sought off-plan options in Jumeirah Village Circle, Dubai Sports City and nearby districts.

• Downtown Dubai, Business Bay and Palm Jumeirah were highly coveted in luxury off-plan apartments.

Off-plan villa demand is focused on Dubailand, Dubai South, and other affordable suburban communities. Mid-range buyers are eyeing off-plan opportunities in Mudon, Town Square, and Jumeirah Village Circle. Luxury off-plan villa sales gravitated towards Mohammed Bin Rashid City, Dubai Hills Estate, District One and other exclusive developments.

Projects Driving Investor Interest

New off-plan projects attracted strong investor interest, with many selling out within 15 days. Some noteworthy projects included:

• Haven By Aldar
• Mercedes-Benz Places
• Cavendish Square
• Damac Lagoons Views
• Emaar Alana
• Emaar Valo Tower

Investor Profiles and Buying Trends

Nationality Breakdown

British nationals accounted for 23% of Dubai property buyers in Q2 2024, followed by 13% Indian and 5% French buyers. Other key buyers were Egyptian (3%) and Canadian (3%). Russians and Pakistanis made up 4% each. Additional interest came from Italian, German and Turkish buyers.

Cash vs. Mortgage Buyers

46% of Dubai property purchases were cash deals while 54% opted for mortgages in Q2 2024. Cash deals allow faster purchase decisions, while mortgages give budget flexibility.

Preferences by Nationality

British and European buyers showed a preference for Dubai's urban districts like Downtown Dubai, Dubai Marina, Palm Jumeirah and Business Bay.

Indian subcontinent purchasers leaned towards affordable and mid-tier properties in International City, Jumeirah Village Circle, Discovery Gardens etc.

GCC nationals focused on luxury beachfront homes and villas for vacations and investment.

Factors Influencing Demand and Prices

Population Growth

Dubai's population grew around 1.5% every year, driving housing demand. Continued growth projected till 2034 will further strain the housing supply.

New Job Creation

Job creation in sectors like technology, finance and tourism is bringing in new residents who purchase homes. Dubai added around 50,000 new residents in Q2 2024 itself.

Attractive Financing Rates

Low mortgage rates below 3% and flexible repayment tenures allowed more buyers to enter the market in Q2 2024.

Visa Reforms

Reforms in UAE residency laws like the 10-year Golden visa boosted demand from foreigners to buy Dubai homes in Q2 2024.

Lifestyle Preferences

Dubai offers a secure, cosmopolitan lifestyle in a tax-free environment. This saw many expatriates purchase homes in Q2 rather than rent.

Work-Live Dynamics

Hybrid work-from-home policies after COVID make outlying communities with larger homes attractive to buyers.

Residential Rentals Market

The rental market also witnessed upward movement, with average residential rents in Dubai rising 22% for apartments and 23% for villas in Q2 2024. Property Monitor reported a 47.7 per cent month-on-month increase and a 45.9 per cent year-on-year rise in sales transaction volumes.

Several factors drove this growth - strong employment growth in Dubai, new tenant demand materializing, uplift from upcoming events like Expo 2020, and delays in new rental supply completions.

Rental Rate Analysis by Location

Apartment Rentals

Among apartments, Emaar Beachfront saw the highest rental increase at 192%, followed by Bluewater island at 83%. Rents in established areas grew as new supply remained constrained. More affordable areas like International City and Dubailand also saw rental rate increases. Business Bay had moderate growth at 7% as ample new supply came online.

Villa & Townhouse Rentals

Rental growth was even more pronounced in the villa market, with Palm Jumeirah rents spiking 93% amid tight supply. Other top performers were Jumeirah Islands at 47% increase and Dubai Hills at 32%.

Areas like Arabian Ranches, Damac Hills, Town Square and Al Furjan also witnessed rental increases in the range of 14-19% as demand outpaced new completions.

Transaction Volume Trends

Apartment Rentals

Overall, apartment rental volumes declined 7% in Q2 2024 versus the previous year. Renewals dropped 3% as tenants upgraded or relocated. However, new leases in just-completed developments surged, such as Emaar Beachfront, which saw a 192% increase in new contracts.

Villa & Townhouse Rentals

Similarly, villa/townhouse rental transactions reduced 11% year-on-year in Q2 2024. Renewals were stable, pointing to tenants hoping for normalization.

New villa leases declined but shot up in new handovers like Tilal Al Ghaf where they rose 603%. Town Square also attracted 65% more new villa renters.

Apartment vs Villa Rental Yield

Apartment

Villa

Tenant Profiles and Preferences

Nationality Mix

Expats made up 90% of Dubai's rental tenants in Q2 2024, led by British (21%) and Arabs (combined 20%). South Asians like Indians (8%) preferred affordable rentals.

Western Europeans (like French 4%) and East Asians (Russian 4%) focused on luxury rentals for expatriate assignments. Canadians (3%) showed balanced demand.

Job Profiles

Professionals in management, technology, finance, hospitality and creative roles sought apartment rentals in urban districts.

Families with school-going children had preference for villa/townhouse rentals in suburban communities.

Location Preferences

Younger expatriates and studio tenants mostly picked affordable rental apartments in International City, Dubai Silicon Oasis, Deira, Bur Dubai.

Lifestyle-focused tenants liked modern mid-range apartments in Downtown Dubai, Dubai Marina, Jumeirah Beach Residence.

Those prioritizing space and privacy at premium rents opted for luxury apartments in Emirates Hills, Palm Jumeirah.

Budget-conscious families preferred villa rentals in International City, Al Barsha, Mirdif, Damac Hills 2.

Mid-range tenants sought villa/townhouse rentals in Arabian Ranches, Reem, Town Square, Mira Oasis.

High-end tenants rented luxury villas in Emirates Hills, District One, Palm Jumeirah, Al Barari.

Factors Influencing Rental Growth

Job Growth

Employment in Dubai grew over 4% in Q2 2024, driven by a resurgent economy. Fresh enrolment in higher education also rose, leading to rental housing demand.

New Quality Supply

While upcoming supply has eased rent increases in some sectors, newly completed premium projects still command high rents. For instance, Dubai Hills Estate villas are achieving AED 500,000+ in annual rent.

Work-Live Dynamics

Many employers continued hybrid work models in Q2 2024. This led some tenants to opt for larger homes in suburban communities conducive for remote work.

Lifestyle Preferences

Changing preferences of affluent expatriates towards high-quality branded residences pushed up rents in some luxury developments like Downtown Dubai.

Commercial Real Estate

Office Market Performance

The Dubai office market maintained stable occupancy rates in Q2 2024, averaging around 91.9% across the city. Prime business districts like Downtown Dubai and DIFC saw average asking rents creep.

This huge amount of occupier activity fueled Dubai’s office segment over the year's first half. Data from the Dubai Land Department shows that the total number of rental registrations increased by 35.8% compared to the year prior, reaching 46,850.

Tenants focused on sustainability, smart technology, amenities and flexible leasing options. Technology, e-commerce, consulting and finance tenants drove leasing demand. Free Zone setups also increased to leverage Dubai's business environment.

Retail Market Overview

Dubai's retail sector saw increased occupancy in Q2 2024 as tourists returned. Overall occupancy touched 90%, with malls in prime locations seeing even higher figures.

Average asking rents for retail space rose 5-15% in established malls in Q2 2024, as tourists boosted footfall. But newer secondary malls continued to offer incentives like rent-free periods to boost occupancy.

Dubai Mall has achieved further growth in 2024, recording 57m visitors during the first half of the year in comparison to 52m visitors for the same period in 2023. Many top brands like Apparel Group, and Bacha Coffee are set in Dubai. Due to the supply-and-demand imbalance, rents in Dubai continued to register increases. In the year to the first quarter of 2024, average retail rents in Dubai rose by 10.5%.

Not only malls visit, but Dubai also retained its ranking as the 3th most visited city globally, attracting 6.68M overnight visitors in Jan-Apr 2024, with an increase of +11% compared to Jan-Apr 2023

Hospitality Market Performance

Dubai's hotel occupancy touched 90.8% in Q2 2024, crossing pre-pandemic levels, as visitor confidence returned. Average daily rates (ADR) climbed 9.3% annually, reaching AED887, the highest growth globally. This pushed revenue per available room (RevPAR) up by 13.1% annually to AED 805, highlighting strong recovery.

Major events like the Gulfood exhibition held between February 19 and 23, the FIFA Beach Soccer World Cup between February 15 and 25, the Dubai Duty-Free Tennis Championships between February 18 and March 2 boost tourism and hospitality demand further in Q2 2024.

The market saw limited new hotel openings in Q2 2024 with only ~2,000 keys added. Some newly open hotels are as follows

• FIVE LUXE
• Hilton Dubai Creek Hotel & Residences
• The Lana, Dorchester Collection, Dubai
• Adventure Overnight Stay For Groups
• The Biltmore Hotel Villas
• One Za’abeel
• Th8 Palm Dubai Beach Resort, Vignette Collection
• Banyan Tree Dubai
• Vida Creek Beach
• Address Grand Creek Harbour

Future Outlook

Q2 2024 Projections

Q2 2024 is expected to make the Dubai residential real estate market resilient, with moderate price and rental growth projected.

New project launches and off-plan sales will likely gather momentum. Investor demand is expected to sustain owing to Dubai's status as a safe global investment haven. The luxury segment may see more first-time international buyers enter, given currency fluctuations making Dubai an attractive proposition.

Forecasts for 2025 and Beyond

The Dubai market is projected to continue its strong run in 2025 and beyond. Price and rental escalations may taper from the steep Q2 2024 levels but remain in positive territory. Population and household growth will necessitate 60,000+ new residential units per annum till 2026, ensuring absorption of the development pipeline.

The affordability barrier that has crept in needs easing to maintain volume sales momentum. A broad-based slowdown in global economies may Emerging trends like scattered site development across the emirate signal more opportunities. But new launches will need to pack value, not just glitz.

Opportunities

Districts worth tracking for affordable properties include Dubailand, Dubai South, Meydan and Dubai Silicon Oasis. Plotted communities may hold potential for custom villas. Investors should seek lower-density projects not outpacing demand.

For mid-range properties, hotspots to watch span Arjan, Mira, DSO, Meydan, Jumeirah Golf Estates, Dubai Studio City, and Sports City. New amenities, improving infrastructure and inclusive community planning will prove key.

In luxury real estate, Palm Jumeirah, Downtown Dubai, Palm Jumeirah, Emirates Hills and District 2020 adjacent to the Expo site remain attractive. Branded developments by reputable names will likely command higher prices.

Risks

Oversupply in off-plan is a concern, especially in crowded asset classes. Another downside risk is rising interest rates, which may dent investor profits and buyer affordability. However, larger developers often subsidize rates during project construction.

Geopolitical or oil price uncertainties cannot be ruled out either. But Dubai enjoys relative insulation and its safe haven appeal persists.

Conclusion

The outlook for Dubai real estate stays bullish overall. While red-hot property prices and rental growth may plateau, the market's resilience against global currents bodes well. Dubai will continue upgrading its structural advantages as both an investment conduit and lifestyle haven. However, new launches will require differentiation, not just promotional shimmer. And easing bottlenecks like title deed issuance and post-sale service will help sustain momentum.

The expanding buyer demographics, fast-evolving work dynamics, and enrichment of living experiences point to exhilarating times ahead for Dubai's residential realty.