The off-plan market, currently making up around 55 percent of Dubai's total real estate transactions, has seen consistent growth over the past few years.

Dubai's real estate sector is experiencing a significant increase in land and plot prices, largely fueled by the booming off-plan sales. This presents fresh opportunities for investors, but they must stay vigilant to capitalize on them. The off-plan market, which accounts for approximately 55 percent of Dubai's total real estate transactions, has been growing steadily and shows no signs of slowing down. In the first three quarters of this year, off-plan sales surged to AED 179.3 billion, marking a 42 percent increase compared to the same period in 2023. The number of off-plan transactions also jumped by 44 percent to 63,700, while the average price per square foot rose by 15 percent to AED 1,600.

"The growth of this segment has encouraged developers to explore new land opportunities, thereby driving up prices and establishing a clear trend. Land in certain areas remains relatively affordable until these locations attract developer interest. Once this happens, prices skyrocket, reflecting the market's strong demand. This upward trend in land prices will continue as long as developers can acquire land at rates that enable them to develop and sell off-plan projects profitably," explained Firas Al Msaddi, CEO of fäm Properties. The profitability of these projects is crucial for sustaining land demand, ensuring ongoing growth in this sector.

Looking at the broader picture, the availability of land in Dubai today is much more limited compared to five years ago. This scarcity is especially evident in high-demand areas like Business Bay. "Just a few years ago, 100 plots were available for sale in this prime location. Today, only nine plots are on the market, with prices doubling or even tripling since the pre-Covid period," Msaddi noted. For larger plots suitable for master community developments, the situation is even more challenging. Private developers find it nearly impossible to secure enough land for new master community projects.

The surge in land prices isn't limited to plots for buildings and towers; villa and townhouse plots are also appreciating significantly. Both individual buyers and companies have recognized the lucrative margins in purchasing land, developing villas or townhouses, and then selling them. This trend has notably contributed to the soaring prices for villa plots in Dubai. For example, in Jebel Ali Hills, land that previously sold for AED 70 to AED 80 per square foot pre-Covid is now commanding AED 250 to AED 300 per square foot.

As the off-plan market continues to expand rapidly, land prices are expected to rise further. Meanwhile, 2024 is set to break records with the highest number of newly launched projects in a single year. This surge in new developments could further propel the market, making it a pivotal year for real estate investors. However, they should approach the market with caution, closely monitoring developments, particularly as the off-plan segment reaches unprecedented levels of activity.

Investing in Dubai's real estate can be highly rewarding, but success depends on smart decisions. Here are three crucial strategies to safeguard your investment, according to Msaddi:

• Seek a real estate expert you trust after asking them questions and listening to them for ten minutes. You need someone who can guide you to opportunities that align with your goals, not just theirs, making them an essential asset.

• Always personally inspect any property before buying, whether it's completed or under construction. This firsthand look will help you assess the property's condition, surrounding infrastructure, and future growth potential.

• Obtain your market intelligence from a reliable source using up-to-date data from the Dubai Land Department. This will ensure you make confident, informed decisions.

Source link:   https://www.khaleejtimes.com