Anyone with even a passing interest in Dubai will be aware that its real estate market is currently firing on all cylinders – and has been for some time. Since the end of the global pandemic, Dubai’s property sector has continued to go from strength to strength, shattering an array of records along the way.
In 2019, the total value of Dubai’s real estate transactions passed $61.5 billion, a 2.1 per cent uptick compared to the previous year. In 2020, as the Covid-19 crisis negatively impacted markets around the world, this figure fell to approximately $47.65 billion.
Fortunately, it didn’t take long for the emirate to (more than) recover, with over $80 billion worth of real estate deals recorded in 2021 – and it’s fair to say that many analysts assumed normal service would be resumed thereafter. However, Dubai’s property sector went on to exceed even the wildest expectations in the post-pandemic period, clocking up transactions valued in excess of $172 billion in 2023.
While the market has continued to perform well in 2024, we appear to be witnessing a shift in the balance between off-plan and secondary real estate deals. Sales of under-construction properties surged to 60 per cent of total transactions in July 2024, a year-on-year spike of 49 per cent.
So, why is Dubai’s off-plan property market proving so popular right now? Here are my thoughts…
Supply and demand
In part, the answer to this question comes down to the simple matter of supply and demand. As demand from high-net-worth individuals (HNWIs) and local residents has increased, so too has scarcity within Dubai’s ready home sector.
This trend is being compounded by sustained growth in the emirate’s population, which increased by almost 100,000 between January and August 2024 in line with government targets. At the current rate, Dubai’s population looks set to pass 5.5 million residents by 2040.
Increased interest from wealthy investors coupled with an influx of new residents will inevitably put pressure on Dubai’s supply of ready homes. It’s hardly surprising, therefore, that prospective buyers are looking towards off-plan projects to meet their housing requirements.
Projects aplenty
While limited supply in the secondary market has certainly bolstered demand for off-plan properties in Dubai, it’s certainly not the only reason why planned developments are faring so well in the current market. In my opinion, the raft of new projects launched since the pandemic has been one of the biggest growth drivers.
In December of last year, I published a blog detailing 20 developments launched by Damac Properties in the space of 12 months. So far this year, we have launched a diverse range of additional projects including ELO (1, 2 and 3) and Violet at Damac Hills 2; Riverside, a brand-new master-planned community for Dubai; and Shoreline by Damac, a beachside residence located on Al Marjan Island in Ras Al Khaimah.
And I’m only talking about Damac! In April, Property Monitor revealed that Dubai was witnessing the launch of a new project every 18 hours, on average. What’s more, Dubai developers are projected to hand over 38,000-plus new homes by the end of this year. Amid unprecedented demand, off-plan communities are allowing tens of thousands of would-be buyers to get a foot on the local property ladder.
Enhanced customisation options
Last but not least, off-plan real estate is ideal for those looking for homes tailored to their specific years. Under-construction developments offer buyers the opportunity to personalise their future residences in a way that is not often possible in the secondary sector.
From the latest décor and bespoke fixtures and fittings to customised room layouts and seamlessly integrated technology, off-plan properties can be crafted to suit their future inhabitants’ every need. Ready homes, on the other hand, are – by their very nature – already complete, meaning buyers usually have to settle for what’s on offer and modify their property over the longer term.
In summary, growth is accelerating in the off-plan market due to a selection of factors, but that’s not to say that Dubai’s secondary real estate sector is floundering. On the contrary, transactions in this segment increased by 5 per cent in Q2 2024. However, when one considers that off-plan deals saw a 61 per cent spike, accounting for more than double the number of ready homes sold during the same period, it’s not difficult to see which way the wind is blowing.
Although demand for secondary units in Dubai will no doubt remain strong, it seems extremely likely that Dubai’s off-plan segment will continue to dominate transaction figures for the foreseeable future.
