Dubai Real Estate Outlook – White Paper

February 5, 2024 | Sustained Growth Through 2024


Economic Growth in 2023
Dubai continues to build on its position as a global economic hub in 2023, with the emirate achieving average growth of 3.2% year on year to June 2023, defying global economic trends in spite of increasing regional geo-political unrest. Its best performing sectors by GDP include logistics and warehousing at 10.5% followed by accommodation and food services at 9.2%.

It is no surprise that Dubai’s real estate sector also demonstrated substantial GDP growth over the same period, racking up 3.6%, thanks to an influx of investors and new residents who continue to pour into Dubai for its business-friendly regulatory environment and lifestyle offering.

Across every sector, Dubai’s commitment to digital adoption has seen its whole economy benefit from digital transformation efforts which have created an ecosystem that enhances it proposition for inward investment, foreign trade, logistics efficiency and of course, the ease of acquiring real estate.

Dubai’s growth momentum is visibly evident by the flurry of commercial activity as the city’s bustling roads can testify, the number of visitors to Dubai and the sheer volume of tourists visiting the emirate.

The latest figures from the world’s busiest Airport show that 41.6 million passengers have transited through Dubai Airport in the first 6 months of 2023, beating pre-pandemic traffic with an expected 85 million travelers by the end of this year. The number of visitors to Dubai has also set new records, with Dubai Tourism declaring 8.5 million visitors in the first half of 2023, the highest ever recorded in Dubai’s history.

Many of those visitors have come to invest in Dubai or look for employment opportunities which contributed to a year-on-year population growth of 100,000 new residents as of June 2023. Dubai’s population will likely continue to attract more residents in the years to follow as business, residency and investment regulations continue to evolve, attracting both capital and people.

All of these factors will have a positive impact on Dubai’s real estate market which underpins the growth the emirate is witnessing in almost every real estate segment, from residential to office and through to commercial and industrial.

Volumes & Gains in Real Estate
Dubai’s real estate sector serves as a strong indicator and benchmark for the economic data being released. The property market continues to see record-breaking sales and value gains which indicate continued strong demand and rising rental values across the city and in all real estate segments.

According to a research study by Savills, the 5-year average in sales volumes is up 209%.

In the first half of 2023, Dubai saw more than 57,000 property transactions, a 44% increase over the year before, with ready home sales accounting for 47% of the volume, the highest demand we have seen to date for ready homes as new residents look for immediate accommodation.

The momentum continued through the third quarter which saw a further rise to 87,154 transactions, an increase of 35.4% over the same period last year, and the highest ever recorded in this period.

It is evident that Dubai’s luxury segment has outperformed all others in terms of gains and price, as the ultra-wealthy continue to flock to Dubai since the end of the pandemic lockdowns. Luxury properties have continued to see significant value gains with a 48.8% increase in prices in the year to June 2023.

In fact, since the third quarter of 2020 when property prices had hit their bottom, the luxury property segment saw a whopping 225% price increase to date as demand continues to surge, placing Dubai in top position in the Knight Frank Global Cities Index which it has held for eight consecutive quarters. The second and third highest performing property markets are Tokyo and Manilla respectively, making Dubai the world’s busiest luxury property market.

The number of homes sold over US$ 10 million or more was 277 units in the first nine months of 2023, valued at US$4.91 billion, and will likely continue to increase through the remaining quarter of this year.

Wealthy investors looking to protect their wealth and assets are the main drivers here, as Russians, Indians and Europeans shift their home bases to Dubai, with Palm Jumeirah making up over 50% of these luxury sales, followed by Emirates Hills and Jumeirah Bay Island.

It’s worth noting that Dubai has started to receive an influx of luxury property buyers from China who began investing here again at the start of 2023, as China eased its post-pandemic travel restrictions, which according to Emirates NBD Research, has revealed a 300% rise in Chinese visitors to Dubai in the first half of 2023.

This will undoubtedly continue to increase demand and prices for both luxury and mid-market/ value properties through 2024, with the biggest volume of sales expected in the value segment.

Mid-Market Catch Up in H2
The mid-market, which is the segment that ACUBE caters to, is by far the single largest segment in demand in Dubai, with competitively priced residential off plan and ready units taking the largest slice of the sales volumes.

Dubai saw off plan sales hit US$9.3 billion in the second quarter of this year and taking 58.7% share versus secondary market properties, a stark shift from the previous years where ready homes dominated sales.

While off plan sales volumes dipped in September 2023, likely due to people returning from holidays and getting back to the normal rhythm of work and school, demand momentum increased in the secondary market with ready home sales rising significantly.

All in all, record sales of plots, villas and apartments hit US$ 2.23 billion in a single week ending 20 October, clearly showing that demand remains strong.

Buyers in the mid-market space are looking for a mix of luxury, amenities, and affordability, in both ready and off plan, where they can enjoy the benefits of community living in a building versus more expensive villas and town houses.

The high demand for affordable, high-quality apartments and the significant price uplift in luxury properties has helped to raise the price of apartments in all of Dubai’s affordable neighborhoods. The apartment segment saw a 1.6 % increase in September 2023, with an overall year on year increase of 11%, the highest capital growth for apartments in over 10 years, according to a report by ValuStrat.

Demand for apartments has led to significant rental increases of 20 to 50% across Dubai and is driving many residents to consider first-time property ownership. Those who do not want to apply for mortgages have abundant direct-from-developer options with easy payment plans that can stretch from three to eight years. Such competitive payment plans offer property ownership for less than the rental prices that many tenants are currently paying, creating an incentive for developers to build more affordable homes.


All Sectors Will Continue to Grow
Dubai’s real estate sectors remain the main focus for investors and end users alike, largely due to Dubai’s ability to continue to attract new residents yearly since the end of the pandemic lockdowns, but also due to the government’s ongoing focus to expand Dubai’s economic strength and industries.

The government’s headline initiative was approved in July 2023. The Dubai 2040 Urban Plan is an ambitious but meticulously planned strategy that will see the emirate increase its population from the current 3.6 million residents to 7.8 million during the next 16 years.

This master plan touches on almost every aspect of urban development including the creation of five urban districts, more than doubling the size of existing green and recreational areas, increasing health and educational facilities by 25%, increasing the length of public beaches by 400%, increasing hospitality and tourism facilities by 134%, and allocating 1.7 billion square feet of land for industrial and economic activities. Other goals set in the Dubai 2040 Urban plan including urban planning laws, providing for national housing for citizens, increasing public transport services and access, as well as allocating 60% of the land in the emirate as nature reserves.

This ambitious plan is already in implementation and will see Dubai’s city limit reach the end of its border with Abu Dhabi, adding more housing, industrial, retail, and commercial real estate to opportunities that are certain to attract more investors and developers well into the next decade.

Ready Versus Off Plan
With such a long-term view to economic growth, there will be significant opportunities in both the ready and off plan segments, particularly in the residential space since the continued population growth will include a mix of diverse buyers with different needs and financial capabilities.

Affordable homes will continue to be the highest in demand and as Dubai’s real estate sector continues to evolve, we will see developers offering competitive payment plans with partially and fully furnished offerings to make homes more accessible to the largest portion of the population.

For off plan buyers, many new projects are being announced or planned to expand Dubai’s footprint south to the Abu Dhabi border, which is currently referred to as Dubai South, an area that borders with the site of the Expo 2020 Dubai which has already been transformed into Expo City.

This area of Dubai is considered the 4th urban centre in the Dubai 2040 Urban Plan and borders the Palm Jebel Ali which has seen significant sales since villas were released for purchase in September 2023.

Expo City has been converted into an innovation and logistics freezone and has also been re-organized as a ‘real estate master developer’ with several major residential projects already announced.

More popular areas such as Arjan, JVC, Sports City and the Dubailand area continue to grow as developers focus on new construction for affordable apartments and town houses.

As with the boom in residential property, Dubai’s commercial property market is also witnessing strong demand and is currently experiencing a supply shortage. Defying the global slump for office space, Dubai’s commercial property sector has witnessed a 23% increase in demand in the first half of 2023, the highest ever for the six-month period.

As more multinationals and businesses move to Dubai, the shortage of grade A office space continues to push prices up to new levels. According to Knight Frank, new office space in Dubai being delivered until 2026 is just three million square feet with much if it already reserved for tenants.

Demand for premium office space was the highest in DIFC, followed by Business Bay which saw rental increases of 69%, Trade Centre District (54%) and Dubai Marina (54%), as per Knight Frank’s report.

The supply shortage for grade A office space is likely to remain for an extended period as data clearly demonstrates Dubai’s continued success and momentum in attracting new global businesses, defying falling demand and prices for offices in the largest global business hubs.

As we come to the end of 2023, the performance of Dubai’s real estate sector demonstrates the emirate’s success in maintaining its growth and momentum.

Record sales of plots in 2023 also highlights the confidence of existing and new developers in the real estate sector, with many new projects in the pipeline for 2024.

The sector’s growth over the last two years is a strong indicator for what can be expected in 2024, with most of the real estate community remaining extremely positive for the year ahead.

While the number of under-construction projects across the emirate is not readily available, it’s not difficult to assess that the real estate boom here in in full swing.

Empty plots across most of the urban areas of Dubai, which have been idle for years, are now slated for new developments and most are under construction.

As a Dubai developer, we are also confident that the growth momentum is sustainable in the years to come and have already committed to developing one million square feet in the coming three years, with our first residential project, Adhara Star, already sold and under construction. Our second project will be announced before the end of 2023, and we are confident this new development will be welcome addition to Dubai’s property portfolio.