Dubai Developers Race To Buy Land As Prices Skyrocket

Dubai developers are fiercely competing to purchase land plots. Prices are soaring as demand surges.

Many prime areas like Downtown Dubai and Business Bay are almost fully built out. Very few plots remain for new projects. This limited supply is pushing land prices up.

Local developers have launched multiple new projects to meet demand. They are rapidly growing their land banks. Danube Properties alone unveiled over $2.7 billion in residential projects in 2023. These are in key areas like Business Bay, Jumeirah Village Circle, and Maritime City.

Binghatti Properties recently spent $272 million to buy Dubai plots. This was even before it issued its recent $300 million sukuk on Nasdaq Dubai.

“We want flexibility in cash injections,” said CEO Muhammad Binghatti. The funds will quickly build out projects that are nearly sold out. Liquidity speeds up construction and handover.

Foreign developers are also entering Dubai. This further increases demand for land. Hot areas like Maritime City, Jumeirah Village Circle, and Arjan are developer targets. Prices in these locations have jumped 50% or more in two years.

Dubai’s land banks are shrinking rapidly. Downtown Dubai and Business Bay plots are scarce. This drives prices higher going forward. S&P analysts warn of “fast-reducing land banks.” Developers must “purchase new land parcels at high costs,” they said. But S&P said financial health is improving “due to record pre-sales and faster cash collections.”

Still, they cautioned that oversupply could “precipitate a cyclical reversal.” S&P expects Dubai’s market to cool over the next 12-18 months.

Increased supply and global economic pressures may soften demand. But for now, developers are racing to buy land. Prices are skyrocketing as a result.