Dubai Real Estate Boom: Unprecedented Growth, Looming Risks, and a AED 12 Billion Bet
By Firas Al Msaddi on Wednesday, 19 June, 2024
Dubai’s Real Estate Surge: Booming Growth and the Shadow of Oversupply
The UAE real estate market is reaching unprecedented heights, driven by a combination of strategic initiatives and market dynamics. In Q1 2024, sales transactions soared past 65,000, doubling Q1 2023 figures and tripling those of Q1 2022. The transaction value reached an astounding 186 billion AED, doubling the figures from 2022 and significantly surpassing the 150 billion AED of Q1 2023. May 2024 alone shattered all previous records with a remarkable 45 billion AED in transactions, marking a historic milestone for the industry.
However, with this rapid growth comes the looming risk of an oversaturated market. With over 95,000 units expected to be handed over by 2026, the balance of supply and demand teeters on a knife-edge. Despite these challenges, here are 10 impactful factors that have fueled today's market and are poised to cement its sustainability:
Inflation:
The inflationary environment has spurred investment in real estate as a hedge against devaluing currencies. Both individual and institutional investors are turning to real estate as a familiar and reliable asset class to navigate inflation risks.
Dubai’s Global Positioning:
With a comprehensive strategy and execution at every level—from infrastructure to advanced residency and tourist visa rules, and mind-blowing lifestyle attractions—Dubai has solidified its global appeal.
Ultra-Luxury Real Estate Segment:
A new market segment has emerged, attracting billionaires and ultra-high-net-worth individuals (UHNWI). Pre-COVID, Dubai had fewer than 10 ultra-luxury real estate projects; by 2026, this number is expected to increase twentyfold. This segment is now a permanent fixture in Dubai, with properties transferring ownership among the wealthy.
International Real Estate Developers:
Dubai has seen an influx of well-established international real estate developers who have brought their expertise and client base, introducing new investors to the Dubai market.
Increased Real Estate Agents:
The number of registered real estate agents has risen to 19,000, with projections to reach 23,000 by the end of the year. Dubai has also become a magnet for international real estate companies.
Market Regulation:
Tens of thousands of fake online ads have been removed through a unique collaboration initiated by fäm Properties with the Dubai Land Department, aiming to create more transparent and reliable online property listings on real estate portals and social media.
Strong End-User Demand:
Sustainable growth in rental prices has stimulated higher rental returns, attracting more investors and encouraging end-users to purchase instead of renting.
Market Transparency:
DXBInteract has played a pivotal role in enhancing market transparency, making data-driven decisions easier for all stakeholders. It has attracted a significant number of international investors who feel secure in a transparent market where every offering can be verified through DXB Interact's data on real transaction prices, supply and demand trends, and more.
Non-Mortgage Driven Market:
With rising interest rates impacting many global markets, Dubai has remained unaffected. Unlike other markets, Dubai's real estate is not heavily dependent on mortgages, reducing vulnerability to financial market fluctuations.
New Market Segment for Master Agency of Real Estate Development Management:
This emerging segment is set to redefine how real estate development is managed and marketed in Dubai. Financial investors, construction contractors, and new developers are increasingly using the master agency services of fäm Properties. In 2024 alone, under fäm Properties' master agency services, 12 billion AED worth of projects will be launched. These project owners find it safe to get the help of fäm Properties from inception to exit due to their unique value proposition:
- Largest sales force in the Dubai real estate market.
- Comprehensive insights through extensive geographic coverage with over 26 branches across the city.
- Expertise in prop-tech and data analysis via their groundbreaking platform DXBinteract, in collaboration with the Dubai Land Department.
Despite the booming market, the high supply poses a significant risk. With over 95,000 units expected to hit the market by 2026, the potential for an oversupply situation looms. However, the likelihood of a five-year market growth phase is more likely to happen. The government's strategic planning and preparation are designed to outweigh and outperform the risks of oversupply. Dubai has already become one of the most attractive global destinations for tourists, business, and residency. Furthermore, given the current global situation, particularly in Europe and the region, Dubai stands out as the most qualified city to sustain and enhance its market growth.
The UAE real estate market is reaching unprecedented heights, driven by a combination of strategic initiatives and market dynamics. In Q1 2024, sales transactions soared past 65,000, doubling Q1 2023 figures and tripling those of Q1 2022. The transaction value reached an astounding 186 billion AED, doubling the figures from 2022 and significantly surpassing the 150 billion AED of Q1 2023. May 2024 alone shattered all previous records with a remarkable 45 billion AED in transactions, marking a historic milestone for the industry.
However, with this rapid growth comes the looming risk of an oversaturated market. With over 95,000 units expected to be handed over by 2026, the balance of supply and demand teeters on a knife-edge. Despite these challenges, here are 10 impactful factors that have fueled today's market and are poised to cement its sustainability:
Inflation:
The inflationary environment has spurred investment in real estate as a hedge against devaluing currencies. Both individual and institutional investors are turning to real estate as a familiar and reliable asset class to navigate inflation risks.
Dubai’s Global Positioning:
With a comprehensive strategy and execution at every level—from infrastructure to advanced residency and tourist visa rules, and mind-blowing lifestyle attractions—Dubai has solidified its global appeal.
Ultra-Luxury Real Estate Segment:
A new market segment has emerged, attracting billionaires and ultra-high-net-worth individuals (UHNWI). Pre-COVID, Dubai had fewer than 10 ultra-luxury real estate projects; by 2026, this number is expected to increase twentyfold. This segment is now a permanent fixture in Dubai, with properties transferring ownership among the wealthy.
International Real Estate Developers:
Dubai has seen an influx of well-established international real estate developers who have brought their expertise and client base, introducing new investors to the Dubai market.
Increased Real Estate Agents:
The number of registered real estate agents has risen to 19,000, with projections to reach 23,000 by the end of the year. Dubai has also become a magnet for international real estate companies.
Market Regulation:
Tens of thousands of fake online ads have been removed through a unique collaboration initiated by fäm Properties with the Dubai Land Department, aiming to create more transparent and reliable online property listings on real estate portals and social media.
Strong End-User Demand:
Sustainable growth in rental prices has stimulated higher rental returns, attracting more investors and encouraging end-users to purchase instead of renting.
Market Transparency:
DXBInteract has played a pivotal role in enhancing market transparency, making data-driven decisions easier for all stakeholders. It has attracted a significant number of international investors who feel secure in a transparent market where every offering can be verified through DXB Interact's data on real transaction prices, supply and demand trends, and more.
Non-Mortgage Driven Market:
With rising interest rates impacting many global markets, Dubai has remained unaffected. Unlike other markets, Dubai's real estate is not heavily dependent on mortgages, reducing vulnerability to financial market fluctuations.
New Market Segment for Master Agency of Real Estate Development Management:
This emerging segment is set to redefine how real estate development is managed and marketed in Dubai. Financial investors, construction contractors, and new developers are increasingly using the master agency services of fäm Properties. In 2024 alone, under fäm Properties' master agency services, 12 billion AED worth of projects will be launched. These project owners find it safe to get the help of fäm Properties from inception to exit due to their unique value proposition:
- Largest sales force in the Dubai real estate market.
- Comprehensive insights through extensive geographic coverage with over 26 branches across the city.
- Expertise in prop-tech and data analysis via their groundbreaking platform DXBinteract, in collaboration with the Dubai Land Department.
Despite the booming market, the high supply poses a significant risk. With over 95,000 units expected to hit the market by 2026, the potential for an oversupply situation looms. However, the likelihood of a five-year market growth phase is more likely to happen. The government's strategic planning and preparation are designed to outweigh and outperform the risks of oversupply. Dubai has already become one of the most attractive global destinations for tourists, business, and residency. Furthermore, given the current global situation, particularly in Europe and the region, Dubai stands out as the most qualified city to sustain and enhance its market growth.
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