There are signs of slowing down in a segment of the luxury property market in Dubai, with ‘traditional’ premium neighborhoods recording a decline in sales of residential units last year.
Data from CBRE revealed that there was a 15.5% decline as compared to a year earlier in the total volume of sales transactions in the established prime communities in Dubai.
The real estate consultancy firm revealed that these communities, where homes have a price of more than AED 5 million each, dropped to 1,968.
Properties that have a price of more than AED 10 million are part of the ‘super-prime’ segment and they also saw a 3.1% decline in the number of deals in the same period, as they fell to 1,003.
This trend is expected to continue in 2024 as well, but it is not applicable to nascent developments and only applies to established locations.
The locations that had been tracked for the research include Palm Jumeirah, which recorded the highest volume of transactions in the super-prime as well as prime categories.
A total of 593 properties valued at more than AED 10 million were sold and 963 units priced at more than AED 5 million were sold.
The prime and super-prime neighborhoods also include Jumeirah Bay Island, Emirates Hills and Downtown Dubai, amongst others.
The off-plan segment of the market recorded lower activity and this was one of the reasons behind the slowdown.
Even though the Dubai market saw a strong demand for high-end properties, there were not enough units available to keep up with the demand.
CBRE said that softening off-plan sales were the reason behind the slowdown in activity levels in both prime and super-prime segments.
Meanwhile, there was a notable increase in the secondary market sales. Due to the mature nature of the prime and super-prime areas, they witnessed strong levels of demand.
However, most of the supply available in the market has been absorbed already and recent months have seen very limited new launches. Due to this backdrop, the transaction levels have softened.
But, if sales other than these ‘traditional’ neighborhoods are taken into account, including the ones in nascent developments that are still transforming into prime locations, there was growth.
As a matter of fact, premium properties saw their overall sales achieve ‘record’ growth in the previous year.
There was a 54.5% increase in the total number of transactions for properties with a value of more than AED 5 million, which saw them reach 10,296.
Meanwhile, there was a 68.4% increase in the total number of transactions for properties with a value of more than AED 10 million, which saw them rise to 3,806.
CBRE said that most of the sales that have taken place in these two segments have mostly been in nascent developments due to the level of demand.
The trajectory has been different for traditional prime and super-prime locations, at least in terms of transaction volumes.