According to CBRE, a global leader in commercial real estate advisory services, the total number of residential transactions in Dubai increased 44.2% year on year in May to 15,766, the highest monthly figure on record.
According to CBRE’s latest edition of Dubai’s Residential Market Notes, the volume of sales transactions during the first five months soared to 62,180, a 384.3% increase from the 2019 comparable figure and 30.0% higher than the 2023 record high.
This year-on-year growth has been driven by a 42.6% increase in off-plan sales and an 11.3% increase in secondary market sales.
According to CBRE, Dubai’s residential market has begun to see a significant upward shift in the price brackets where transactions are taking place, but the importance of and opportunities in the affordable and core market segments cannot be overstated.
In May, the number of transactions priced below AED1,000 per square foot fell by 19.3% compared to the same period a year ago.
The core market continues to expand, with a 64.1% year-on-year increase in the number of transactions priced between AED1,000 and AED2,000 per square foot.
Given the upward pressure on prices and strong demand for upper-mid-end properties, activity levels in the AED2,000 and AED3,000 brackets increased by 154% in the year ending May 2024.
The lack of available stock in the higher-end segments of the market is affecting activity levels, with sales of residential properties priced between AED3,000 and AED8,000 per square foot falling 19.5% year on year in May, according to CBRE.
Residential properties priced at AED8,000 per sq ft or higher accounted for only 0.2% of total sales in May, down from 0.3% the previous year, owing to the limited demand and availability of these assets.
Stronger-than-expected price growth has also been supported by increased activity, according to the real estate expert.
In May, average residential prices in Dubai rose 20.1% year on year, down from 20.7% the previous month.
During the same period, average apartment and villa prices rose by 19.8% and 21.8%, respectively. Palm Jumeirah had the highest average sales rates per square foot in both the apartment and villa segments of the market, at AED2,804 and AED5,228, respectively.
According to CBRe, robust levels of demand continue to drive performance in the rental market, with average residential rents in Dubai increasing by 21.1% in the fiscal year ending May 2024.
This growth has been supported by a 22.2% increase in average apartment rents and a 13.1% increase in average villa rents. Higher rents in Dubai’s core and prime residential areas have spilled over into secondary communities, which are now experiencing significant annual rent increases, according to CBRE’s report.
Looking ahead, the property group anticipates that rental rates will continue to rise, but not at the same rate as it has seen in several key and prime residential neighborhoods, which are already experiencing single-digit growth. Affordability constraints are catching up, it added.
Taimur Khan, the Head of Research Mena in Dubai, said: “Demand in Dubai’s residential market continues to record unprecedented numbers, where in the month of May 2024, the highest monthly figure on record has been registered in May 2024, with a total of 15,766 transactions.”
“For the year to date to May, this brings total transaction volumes to 62,180, up 30% from 2023, and a staggering 384.3% from the same period in 2019,” stated Khan.
“Despite the strength of this demand, much has been said about the potential dampening impact of new launches on prices, where supply may again start to outweigh demand. However, the absorption of new stock sits at markedly high levels, where our headline analysis shows at least 70% of units which were launched since 2022 have been sold to date, due to lags in data, we anticipated that this number is materially higher,” he added.
