In Q3 2023, Dubai’s housing real estate market showed mixed trends. Housing prices surged by 27.2% year-on-year and 2.1% quarter-on-quarter, with villa rentals experiencing a substantial 38.7% annual increase. Average annual rents for various villa sizes ranged from Dh312,000 to Dh492,000, while apartment asking rents increased by 19.1% annually. Residential occupancy reached 88.9% in Dubai. Despite the strong demand, the rental market witnessed a gradual slowdown with a 20.6% annual growth, slightly lower than the previous year. The market also saw a significant increase in transactions and market value, underscoring Dubai's enduring appeal as a dynamic real estate hub.
In the third quarter of 2023, Dubai’s housing prices experienced a 27.2% increase compared to the same period in the previous year, with a 2.1% rise from the preceding quarter. According to ValuStrat’s Q3 report, villa rentals saw a substantial annual increase of 38.7%, but there was only a minimal change when comparing it to the previous quarter.
The average annual rents for three-bedroom villas were at Dh312,000, four-bedroom villas at Dh383,000, and five-bedroom villas at Dh492,000. As for apartments, asking rents increased by 19.1% year-over-year and 3.6% quarter-over-quarter. Studio apartments had an average annual asking rent of Dh51,000, one-bedroom apartments at Dh75,000, two-bedroom apartments at Dh111,000, and three-bedroom apartments at Dh170,000. During the third quarter, residential occupancy in Dubai was estimated to be 88.9%.
According to a report from CBRE Group, the average residential prices in Dubai saw a 19.6% increase in the year leading up to September 2023. During this period, average apartment and villa prices rose by 19.7% and 18.9%, respectively.
However, despite continued strong demand, there has been a gradual slowdown in the rental market. Rental growth rates have decreased throughout the year, with average residential rents in Dubai increasing by 20.6% in the year leading up to September 2023, down from the previous 21.7% growth recorded in the previous month.
Regarding the supply of residential units, approximately 27,095 units have been estimated to be delivered in the year to date. Out of this supply, 46.4% is situated in Meydan One, Downtown Dubai, and Business Bay. The CBRE report also anticipates the delivery of an additional 34,651 units for the remainder of the year.
Nonetheless, according to a report from property consultants Allsopp & Allsopp, Dubai’s prime residential communities experienced an average rent decrease of 21% in the third quarter of 2023. Allsopp & Allsopp reported a significant increase in rental transactions, with a 20% rise in rental transactions, and a 29% increase in new rental client registrations from July to September during the summer.
Transactional activity surged by 22%, with Q3 2023 recording 31,216 transactions compared to 25,503 in the same period in 2022. This increase in activity is also reflected in the total value of these transactions, which reached Dh 97.55 billion, marking a substantial 40% increase from Dh 69.5 billion in Q3 2022.
During the third quarter, office spaces in Dubai experienced a 25.5% annual increase in capital gains. The weighted average price for office spaces in Dubai stood at Dh14,230 per square meter. Notably, five major central business districts in Dubai continued to see double-digit annual growth: Jumeirah Lake Towers at 37.2%, DIFC at 33.7%, Rucinace Rov, and Downtown Dubai recorded a growth of 16.8%, and Barsha Heights saw an increase of 14.8%. Valuations for shell and core Grade A office space expanded by 33.3% year-over-year, while Grade B office spaces in the same category experienced a 19.2% year-on-year growth.
In Q3 2023, there was a 9.0% year-on-year growth in office transactions, but they declined by 4.7% quarter-on-quarter, totaling 631 transactions. The median price per square meter for these transactions was Dh11,140 (or ADh1,035 per square foot), marking a significant increase of 28.4%.
The real estate performance in Q3 2023 reflects Dubai’s property market not only as enduring but also as a dynamic force of innovation and adaptability. The significant increase in transactions and market value serves as clear evidence of the city’s enduring appeal to global investors, showcasing Dubai as a resilient and forward-thinking real estate hub.
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