The prices of property in the United Arab Emirates are expected to continue increasing amidst high demand from buyers.
However, analysts and developers have said that the luxury market could see a turn in the second half of 2024.
The expected increase
The tourism and commercial hub of the Middle East, Dubai is expected to see average residential prices rise by 5% to 7%, while prices in Abu Dhabi are expected to increase from 3% to 5%.
The head and director of real estate research at ValuStrat, Haider Tuaima, said that the market would continue to be strong in the next three to four months in terms of transactional activity.
This would also been seen in terms of rental increases and price appreciation. But, he added that there would be an inflection point in the middle of 2024, probably in summer.
It would see a turn in the curve and if that happens, then it will be the high-end luxury market that takes the hit first.
He added that it remained unclear if it would result in a price correction, or stabilize the market, but it is likely that the high-end luxury market would see its direction change.
The property market
2023 saw the property market in Dubai remain strong, as transaction volumes increased in both Abu Dhabi and Dubai amidst government initiatives, like residency permits for remote and retired workers.
Likewise, the overall growth of the economy has also been a factor. Data from the Dubai Land Department showed that 116,116 new property transactions were recorded in Dubai in the first nine months of 2023.
These transactions were valued at AED 429.6 billion, or $117 billion. There was a 33.8% increase in the number of total transactions in the emirate on an annual basis.
Meanwhile, there was a 36.7% increase in the value of the transactions during this period. Abu Dhabi also saw property deals grow amidst higher demand from GCC and domestic investors.
The media office of Abu Dhabi reported in July that the total real estate transactions recorded in the emirate were 10,557 in the first half of 2023 and they were valued at AED 46.33 billion.
During the six months, the deals saw their value double, while the volume of transactions, including mortgages and property sales, recorded a rise of 41% on an annual basis.
There was a 19.6% annual increase in residential prices in Dubai in the third quarter, with average villa and apartment prices increasing by 18.9% and 19.7%, respectively.
There was an 18.3% increase in average apartment prices in the emirate in November to reach AED 1,374 per square foot. Meanwhile, there was a 22.2% increase in villa prices to AED 1,679 per square foot.
The super-rich of the world are also spending rather heavily to buy property in the UAE, which has boosted the growth of the real estate market.
A survey conducted by Knight Frank in June revealed that global high-net-worth individuals plan on spending $2.8 million on property in Abu Dhabi because of quality infrastructure and strong economic growth.