Due to a scarcity of affordable properties available for sale, residents and investors are increasingly choosing off-plan projects. This shortage has been exacerbated by a rental market where prices have more than doubled in certain areas post-pandemic. Dubai's off-plan properties are attracting significant interest from both local residents and international investors, thanks to their lower prices and potential for higher returns compared to other global cities, along with the possibility of double-digit rental incomes. Expat residents in Dubai are also purchasing off-plan units to navigate the competitive rental market.
"Investor interest is heavily focused on off-plan projects, with residents divided between off-plan and ready property segments, many favoring off-plan due to the lack of affordable sale inventory. This is further intensified by a rental market where prices have surged significantly post-pandemic," explained Zhann Jochinke, Director of Market Intelligence and Research at Cavendish Maxwell. Developers are enticing buyers with attractive payment plans for off-plan projects, extending up to eight years post-handover, although banks only finance ready properties. In May, there was a 47.1% increase in off-plan Oqood transactions, totaling 10,598, with a similar impressive rise in title deed sale volumes.
Dubai has launched several new mega projects worth billions in 2023 and 2024 to meet the rising demand for off-plan properties. Notable projects include Emaar Properties' two mega projects worth Dh128 billion, Azizi Developments' Dh30 billion Venice project, and Nakheel's multi-billion Palm Jebel Ali. Other developers like Aldar, Damac Properties, and Danube Properties have also initiated numerous projects worth billions over the past two years. Property Monitor, part of Cavendish Maxwell, reported a record surge in new off-plan development launches, with over 15,500 units added to the market with an expected combined sales value of Dh41.4 billion.
This robust demand and the launch of new off-plan projects are evident in various property types, including apartments, villas, and townhouses. Betterhomes data shows a significant increase in off-plan villa transactions, up 209% in May 2024 compared to the previous month. "Post-Covid-19, there has been a growing interest in larger spaces, driving up demand for villas. The recent surge in sales was boosted by new master community launches by Aldar, Damac, and Emaar. Rising rents are also prompting more people to buy rather than rent," noted Sijo Jose, Off-Plan Manager at Betterhomes. The top areas for villa transactions included Haven, Tilal Al Ghaf, Dubai South, Reportage Village, and MBR City.
The rise in villa transactions and their value reflects a growing preference for spacious, luxurious living spaces. The increase in apartment transactions also points to a strong demand for urban living, catering to a diverse buyer base. Developers are responding to this trend by launching new projects, offering a wide range of options for both investors and homeowners. The market is poised to maintain its upward trend, presenting lucrative opportunities for both buyers and developers," concluded Betterhomes.
