Anyone with even a passing interest in Dubai will be aware that its real estate market is currently thriving – and has been for some time. Since the end of the global pandemic, Dubai’s property sector has continued to grow, breaking numerous records along the way.
In 2019, the total value of Dubai’s real estate transactions exceeded $61.5 billion, a 2.1 per cent increase compared to the previous year. In 2020, as the Covid-19 crisis impacted markets worldwide, this figure dropped to approximately $47.65 billion. Fortunately, the emirate quickly recovered, with over $80 billion worth of real estate deals recorded in 2021. Many analysts expected a return to normalcy, but Dubai’s property sector surpassed all expectations, reaching transactions valued at over $172 billion in 2023.
While the market has continued to perform well in 2024, there appears to be 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 increase of 49 per cent.
So, why is Dubai’s off-plan property market so popular? Here are my thoughts…
Supply and demand: As demand from high-net-worth individuals (HNWIs) and local residents has increased, so too has the scarcity within Dubai’s ready home sector. This trend is compounded by sustained population growth, which increased by almost 100,000 between January and August 2024, in line with government targets. At the current rate, Dubai’s population is expected to exceed 5.5 million by 2040.
Increased interest from wealthy investors and an influx of new residents inevitably put pressure on Dubai's supply of ready homes. It’s no surprise, therefore, that prospective buyers are turning to off-plan projects to meet their housing needs.
Projects aplenty: Limited supply in the secondary market has certainly boosted demand for off-plan properties in Dubai, but it’s not the only reason. The raft of new projects launched since the pandemic has been a significant growth driver. In December last year, I published a blog detailing 20 developments launched by Damac Properties in 12 months. This year, we have launched additional projects including ELO (1, 2 and 3) and Violet at Damac Hills 2; Riverside, a new master-planned community for Dubai; and Shoreline by Damac, a beachside residence on Al Marjan Island in Ras Al Khaimah.
And that’s just Damac! In April, Property Monitor revealed that Dubai was witnessing the launch of a new project every 18 hours, on average. Dubai developers are projected to deliver over 38,000 new homes by the end of this year. Amid unprecedented demand, off-plan communities are enabling thousands of buyers to enter the local property market.
Enhanced customisation options: Off-plan real estate is ideal for those seeking homes tailored to their specific needs. Under-construction developments offer buyers the opportunity to personalize their future residences, which is not often possible in the secondary sector. From the latest decor and bespoke fixtures to customized room layouts and integrated technology, off-plan properties can be crafted to suit their future inhabitants’ every requirement. Ready homes, on the other hand, are already complete, meaning buyers usually have to settle for what’s available and modify their property over time.
In summary, growth is accelerating in the off-plan market due to various factors, but that’s not to say Dubai’s secondary real estate sector is struggling. On the contrary, transactions in this segment increased by 5 per cent in Q2 2024. However, with off-plan deals seeing a 61 per cent increase, accounting for more than double the number of ready homes sold during the same period, it’s clear which segment is leading the market.
Although demand for secondary units in Dubai will remain strong, it seems highly likely that Dubai’s off-plan segment will continue to dominate transaction figures for the foreseeable future.
