The Dubai residential real estate market remains one of the world’s best performers, but a shortage of supply is having an increasingly significant impact on rents and sale prices. This scenario is highlighted in recent reports from three leading real estate consultancies, reflecting the trends observed in the first six months of 2024.
According to Savills, Dubai experienced the largest increase in prime residential rents among 30 major cities, with a growth rate of over 12 percent in H1 2024. This surge places Dubai ahead of other high-demand cities like Bangkok and Lisbon. Kelcie Sellers, associate director for world research at Savills, notes, “Dubai and Lisbon have been perennial leaders for growth in their prime rental markets because of excess demand for high-quality rental properties, but Bangkok is a new entrant.”
The demand for prime properties in Dubai has also led to significant increases in sale prices. A CBRE analysis revealed that residential sale prices were 21.3 percent higher in H1 2024 compared to the same period last year. This rise, particularly driven by villa prices, marks an acceleration from the 20.1 percent growth recorded in June. Taimur Khan, head of research for MENA at CBRE, explains that the limited supply is likely to continue driving up prices and rents in the latter half of the year. He adds, “Developers are increasingly bringing forward their plans to ensure that the lack of available stock does not continue to hamper potential activity into the medium and long term.”
Despite the impressive performance, the market faces challenges. ValuStrat’s Q2 analysis showed a drop in the number of deals for ready homes for the second consecutive quarter, despite a nearly 5 percent increase from the same period in 2023. Haider Tuaima, ValuStrat’s head of real estate research, remarked, “The upward trend in valuations and rents across various segments shows that the market cycle is in its upswing stage, demonstrating resilience and growth. However, the decline in transaction volumes calls for a closer examination of market dynamics as stakeholders navigate this evolving landscape.”
Overall, the Dubai real estate market continues to thrive, but the looming supply shortage poses a critical challenge. With prime rents and sale prices on the rise, developers are under pressure to meet the demand for high-quality properties. The market’s future trajectory will depend on how effectively these supply constraints are managed, with potential implications for both local and international investors.
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