Dubai real estate market Q3 2023 - a new record of new construction project announcements

    Summer is over and the temperatures are slowly becoming pleasant. Accordingly, the tourist season has started with great vigor. You can feel and see it on the roads in particular - there is significantly more traffic and congestion again. But now to the development of the real estate market in Dubai:

    Real estate transactions increased again in the third quarter - by 23% compared to the same quarter last year (Q3 2022) and by 3.8% compared to the previous quarter this year (Q2 2023). The JVC area recorded the most transactions per area this quarter with 2,485 transactions. The total value of sales amounted to AED 97.5 billion this quarter, while sales in Q3 2022 amounted to AED 69.5 billion. Specifically, this means that both the number of transactions and sales prices have increased over the last 12 months. Prices per square meter have increased further compared to the last quarter (Q2 2023). Rents have risen only slightly. In contrast to sales prices, however, somewhat less strongly.

    Here is an overview of the increases in purchase prices for apartments according to Bayut compared to Q2 2023

    Jumeirah Village Circle: 2.98%

    Dubai Marina: 4.24%

    Business Bay: 4.38%

    Downtown Dubai: 3.25%

    Palm Jumeirah: 4.10%

    What we have been observing for some time now is that institutional investors, such as larger investment or real estate companies, are buying entire floors with several apartments in new development projects. Buying an entire floor naturally makes the purchase price more attractive - the buyer benefits from a "volume discount". The companies then act as resellers and create WhatsApp groups with various real estate agents. In these group chats, they advertise their apartments for sale with an attractive commission for the estate agents. The apartments are offered at a so-called "premium", i.e. at a higher sales price, in the secondary market (i.e. resale). This approach therefore also puts the sales statistics into perspective, as each apartment is 'sold' twice before it is handed over to the end customer.

    What is particularly striking this year is the record number of new construction projects announced. This year, three months before the end of the year, more new properties were announced (67,078 properties) than in the whole of last year (57,513 properties)! Impressive figures! Especially in comparison to the 'Corona years' with only 8,328 new announcements in 2020 and 26,625 in 2021. In addition to factors such as Corona or the global political situation (Russia/Ukraine war), the low level of construction activity in the past is certainly another driver of the purchase price development in the last two years.

    Below is an overview of the number of new construction projects announced:

    In principle, it can be assumed that projects will be under construction for around three years (without delay). This means that a large number of new properties are likely to come onto the market in 2025 and 2026. We assume that this will have a direct impact on future prices. Especially if the motivation of today's buyers of new-build properties was purely speculative in nature - i.e. with the aim of selling at higher prices shortly before completion or on completion.

    We are excited and will of course keep you up to date. We are now looking forward to the end of the year and to many customer visits and viewings of attractive properties.

    Your Terra Nova Real Estate Team 😊