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Knight Frank - Dubai Residential Market Review Summer 2023

Residential property prices in Dubai rose 4.8% in Q2 2023, marking the 10th consecutive quarter of price increases. Average apartment prices increased 4.8% to AED 1,290 psf while villa prices also rose 4.8% to AED 1,520 psf. Both property types saw double digit annual growth but remain below their 2014 peaks. Demand has driven the fastest growth in more affordable inland communities, with some areas like Dubai Hills Estate and Jumeirah Islands seeing over 25% price increases year-over-year.

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0% found this document useful (0 votes)
244 views14 pages

Knight Frank - Dubai Residential Market Review Summer 2023

Residential property prices in Dubai rose 4.8% in Q2 2023, marking the 10th consecutive quarter of price increases. Average apartment prices increased 4.8% to AED 1,290 psf while villa prices also rose 4.8% to AED 1,520 psf. Both property types saw double digit annual growth but remain below their 2014 peaks. Demand has driven the fastest growth in more affordable inland communities, with some areas like Dubai Hills Estate and Jumeirah Islands seeing over 25% price increases year-over-year.

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© © All Rights Reserved
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Dubai Residential

Market Review
Summer 2023 A quarterly review of key trends and the performance of knightfrank.ae/research
Dubai’s residential market
Average prices rise by
4.8% in Q2
Residential values across Dubai rose by 4.8% during Q2 While price growth over the last three and a half years has
2023, marking the 10th consecutive quarter of price rises. undoubtedly been strongest in the city’s most expensive
The latest increase leaves values 24% higher than Q1 2020 submarkets, more affordable locations, at least on a price
however, average prices remain 11% below the 2014 peak. psf basis, have also experienced a surge in values.
On an annualised basis, prices are up by 17%.
Demand for homes in inland communities, which are
At a segment level, apartment prices increased by 4.8% to relatively more affordable than coastal developments, for
a little over AED 1,290 psf during Q2, with values now 21% instance, have registered some of the steepest rises over
higher than in Q1 2020. Despite rising by 17% over the last the last 12-months, fuelled by domestic buyers.
12 months, apartments still trail the 2014 peak by 14%.
At Dubai Hills Estate, for instance, apartment prices stand
In addition, villa prices also increased by 4.8% between at approximately AED 1,940 psf, an increase of almost 27%
March and June to reach an average of AED 1,520 psf, a in the last 12 months.
rise of 15% from last summer and 51% higher than January
2020 levels. Similarly, at Jumeirah Islands, villa prices have increased
by 56% in the last 12 months alone to reach AED 2,510 psf,
This growth is being driven in large part by the sustained positioning it as the neighbourhood with the fastest rising
strong demand for luxury second homes from the villa values.
Apartments Villas
international elite. Unsurprisingly, this level of growth has
resulted in villa prices surpassing the last market peak in
2014 by almost 5%. This figure is substantially higher in -14.2% 7.4% 15.1% -3.1% 3.6% 7.9% -6.2%
high-demand neighbourhoods, which we explore below. Q/Q Q/Q Q/Q Q/Q Q/Q Q/Q Q/Q

1.9% 24.0% 3.4% 44.3% -2.6%


Q/Q Q/Q Q/Q Q/Q Q/Q

AVERAGE VALUE OF RESIDENTIAL TRANSACTIONS (BY PROPERTY TYPE) -3.4% 18.0% 18.9% 24.7% 17.5% 10.9% 32.1%
Y/Y Y/Y Y/Y Y/Y Y/Y Y/Y Y/Y
AED psf

All Residential Apartments Villas


13.4% 7.0% 27.0% 55.9% 45.2%
Y/Y Y/Y Y/Y Y/Y Y/Y

1,600 64.0% 14.7% 58.5% -13.5% 62.7% 63.2% 38.4%


Q1/20 Q1/20 Q1/20 Q1/20 Q1/20 Q1/20 Q1/20

1,400
23.5% 7.6% 35.3% 239.8% 127.8%
Q1/20 Q1/20 Q1/20 Q1/20 Q1/20
1,200

1,000

800

-11.1% -13.5% +4.8%


600 Below 2014 Below 2014 Above 2014 Jumeirah Beach Residence

Dubai Creek Harbour

Discovery Garden

International City

Madinat Jumeirah Living

Dubai Hills Estate

Dubai South

Arabian Ranches

Jumeirah Islands

Jumeirah Golf Estate

Dubai Hills Estate

Dubai South
peak peak peak
400

200
Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20

Jan-21

Jan-22

Jan-23

Source: Knight Frank, REIDIN


Source: Knight Frank, REIDIN

2 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 3
Palm Jumeirah is still the
star performer
The Palm Jumeirah remains the city’s star-performing Not far behind The Palm Jumeirah are Dubai Hills Estate
villa market, with prices growing by 9% in Q2 alone. This villas, where values have increased by 24% over the last
performance has propelled the growth rate to 44% over the 12 months, followed by Mohammed Bin Rashid (MBR)
past year. City and District One, where prices have grown by 13%
and 14%, respectively, over the same time period.
The exceptional demand for homes in Dubai’s iconic Palm
Jumeirah is best reflected in the fact that villa prices have While apartment transacted prices have not risen at the
risen by 146% since January 2020, but remain at about same rate as villas, some of the city’s most sought-after
AED 4,800 psf, making property on The Palm Jumeirah locations have experienced significant price rises.
relatively affordable on a global scale.
However, villa prices are now 67% higher than their 2017 Downtown (AED 2,440 psf) at 12.5%, for instance, which
peak, while apartments still lag their last peak in 2015 by was named as the second most popular target location by
7%. global HNWI in our recently published 2023 Destination
Dubai report, leads the league table for the first six
months of this year, closely followed by Business Bay
(12.4%) and The Palm Jumeirah (11.7%).

“The exceptional demand for homes in Dubai’s iconic


Palm Jumeirah is best reflected in the fact that villa prices
have risen by 146% since January 2020.”

Average transacted prices on the Palm Jumeirah Average value of residential transactions (by villa submarket)
AED psf AED psf

Apartments Villas Arabian Ranches District One Dubai Hills Estate Emirates Hills MBR City Palm Jumeirah
5,000
5,000

4,500 4,500

4,000
4,000
3,500
3,500
3,000

3,000 2,500

2,000
2,500
1,500
2,000
1,000

1,500 500

0
1,000
Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20

Jan-21

Jan-22

Jan-23
Q1 2012
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023

Source: Knight Frank, REIDIN


Source: Knight Frank, REIDIN

4 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 5
Prime prices up 11.6% in Q2
Dubai’s prime markets, in particular, remain highly
sought after and are responsible for 13% of transactions
(by total value) that have taken place during H1 across
the city. The submarkets that we classify as prime are The
Palm Jumeirah, Emirates Hills, and Jumeirah Bay Island.
Alpago’s Palm Flower
(11 apartments)
With average prime transacted prices standing at around
AED 3,560 psf, or about US$ 970 psf, Dubai remains one
of the world’s most affordable luxury home markets,
which continues to add to the city’s appeal amongst
international buyers.

Knight Frank’s buyer data for H1 shows that nationals


from China (18%) accounted for the biggest group of
international buyers, followed by purchasers from Emirati
Ellington Beach House
nationals (16%) and the United Kingdom (14%).
(123 apartments)
This mirrors 2022, when Chinese buyers dominated our
league table, alongside British (21%) and Indian (12%)
nationals.

The demand for prime residential property has been


so intense that Dubai experienced a record 44% hike in
prime home prices last year – the highest level globally.
Factoring for the 11.6% increase in average transacted
Serenia Living Prime residential value performance
prices during Q2, the annualised rate of growth has further
(226 apartments)
AED psf
accelerated to 48.8%, marking the second quarter of +48.8%
4,000 (AED 3,560 psf)
growth in prime values.

The sustained increases look set to persist, particularly as 3,500


limited new inventory, coupled with a continued influx
of UHNWI acquiring second homes in Dubai's prime
neighbourhoods will continue to support additional 3,000

growth in property prices.


2,500
Indeed, just 368 homes are expected in Dubai’s prime Bvlgari Mansions
neighbourhoods between now and the end of 2025, 98%
(or 360 units) of which are apartments. We return to the
(8 villas)
2,000
broader theme of supply later in the report.

1,500

1,000

500
“Just 368 homes are expected in Dubai’s prime neighbourhoods
between now and the end of 2025.” 0
Q1 2019

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023
Source: Knight Frank, REIDIN

6 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 7
Sustained ultra-prime
demand
Dubai’s luxury homes market continues to attract the Furthermore, with 188 US$ 10 million home sales in the
attention of the world’s wealthy, with global high-net- first six months of 2023, the city is expected to exceed
worth-individuals remaining laser focussed on acquiring the total number of US$ 10 million homes sold in 2022.
second homes in the emirate, as evidenced by the In addition, with average transacted prices continuing to
US$ 3.3 billion worth of homes sold in the exclusive hover at around AED 6,700 psf, or about US$ 1,800 psf,
US$ 10 million+ price bracket during H1. the emirate continues to offer relatively affordable access
to uber luxury living. Still, the average transacted price in
this segment of the market is up 7% on 2022’s AED 6,250
psf.

History of US$ 10 million+ US$ 10 million+ home sales in


home sales in Dubai dubai (H1 2023)
2010 11 Palm Jumeirah 72

2011 5 Jumeirah Bay Island 33 NUMBER OF US$ 10 MILLION+ TRANSACTIONS IN DUBAI

2012 11 Al Wasl - Dubai Canal 18 250


Average transacted
2013 20 Emirates Hills 16 price in H1 2023
2014 12 Tilal Al Ghaf 11
2015 31 Dubai Hills Estate 10 200
AED
2016

2017
15

23
Downtown

Business Bay
5

4
6,700
psf
150
2018 13 Jumeirah Beach Residence 4

2019 22 Bluewaters Island 3

2020 22 District One 3


100
2021 93 Al Barari 2

2022 224 Jumeirah Second 2

H1 2023 188 Za'abeel First 2 50


Dubai Harbour 1

Jumeirah Golf Estates 1

Total 188 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2018 2020 2021 2022 H1
2023
Source: Knight Frank, REIDIN Source: Knight Frank, REIDIN
Source: Knight Frank, REIDIN

8 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 9
Sustained ultra-prime Global US$ 10 million+ home sales in 2022 – top 10 locations

demand Rank City/Territory Number of US$


10M+ homes sold
Total value of US$ 10M+
homes sold

1 London 246 US$ 4.7 billion

What’s more, with 92 deals, Dubai emerged as the busiest US$ in Q2. The average sales price during Q2 stood at US$ 2 New York 244 US$ 4.5 billion
10 million plus market in the world during Q1 2023, edging past 17.5
Hong Kong (67) and New York (58). million for all US$ 10 million+ home sales. 3 LA 234 US$ 4.5billion

The city’s prime neighbourhoods of The Palm Jumeirah, Other neighbourhoods such as Jumeirah Golf Estates, 4 Dubai 224 US$ 3.9 billion
Emirates Hills, and Jumeirah Bay Island continue to dominate Al Barari, Tilal Al Ghaf, and Jumeirah Islands are
sales, accounting for 33% of all US$ 10 million plus home sales likely to soon qualify as prime and remain on our 5 Miami 149 US$ 2.7 billion
“prime watch list”.
6 Hong Kong 131 US$ 2.9 billion

7 Singapore 125 US$ 2.2 billion

8 Palm Beach 113 US$ 2.0 billion

9 Sydney 108 US$ 1.7 billion

10 Orange County 90 US$ 1.4 billion

Source: Knight Frank, REIDIN

Global US$ 10 million+ home sales in Q1 2023 – top 10 locations

Rank City/Territory Number of US$ Total value of US$ 10M+


10M+ homes sold homes sold

1 Dubai 92 US$ 1.7 million

2 Hong Kong 67 US$ 988 million

3 New York 58 US$ 942 million

4 LA 46 US$ 763 million


EXPERT INSIGHT
5 Singapore 37 US$ 579 million

6 London 36 US$ 736 million


Improving inland infrastructure could be one way to spur development away from the coast, particularly considering
the rising importance of green spaces or parks to international HNWI eyeing up residential purchases in Dubai. We 7 Palm Beach 30 US$ 510 million
have found that 86% of global HNWI cite parks as their number one consideration when looking at a residential
investment in Dubai. Given the limited number of development sites in coastal communities, this may be a way to 8 Miami 20 US$ 327 million
create more inland prime neighbourhoods.
9 Geneva 19 US$ 452 million

Faisal Durrani 10 Sydney 10 US$ 133 million


Partner – Head of Research, Middle East & North Africa Source: Knight Frank, REIDIN

10 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 11
Off-plan sales rise
One of the key features of Dubai’s current and third This trend is also echoed in our 2023 Destination Dubai
freehold residential market cycle has been the dominance report, with 53% of HNWI buyers focussed on acquiring
of genuine end-users and second-home buyers in ‘recently built/completed’ homes in Dubai. It is strongest
particular. among those with a net worth of over US$ 10 million (61%),
as well as 71% of HNWI from East Asia. Overall demand
Historically, the market was driven largely by speculative for off-plan purchases is relatively low at just 10% among
activity, fuelled, of course, by the abundance of off-plan global HNWI.
purchase options. In 2009, for instance, just as the Global
Financial Crisis was looming large, 61% of all home sales in With a rise in the volume of product launches over the
Dubai were off-plan transactions. The 10-year average has last 12 to 18 months, as developers respond to the stable
settled at around 42%, and both 2021 and 2022 – the first and sustained demand for homes, the volume of off-plan
two years of this third property cycle – have stood at 42% homes sold has been unsurprisingly rising. Indeed, during
and 44%, respectively, broadly in line with the 10-year H1, off-plan sales, at AED 65.7 billion, have edged out sales
average. for ready homes (AED 64.4 billion).

Dubai residential off-plan vs. secondary sales (by value) Prime submarkets residential off-plan sales vs. secondary sales (by value)
AED billions AED billions

Off-plan sales Secondary sales Off-plan sales Secondary sales

H1 2023 64.5 65.7 H1 2023 6.8 9.9


2022 94.4 128.5
2022 12.5 18.0
2021 44.5 81.7
2021 4.8 11.6
2020 20.9 32.9
2019 31.3 26.7 2020 0.9 4.3
2018 19.9 25.4
2019 1.3 4.1
2017 31.1 35.9
2016 24.3 35.1 2018 1.2 3.6
2015 25.3 54.3
2017 2.2 3.5
2014 25.5 60.7
2016 0.9 3.2
2013 23.5 69.9
2012 7.4 39.9 2015 2.4 4.8
2011 3.8 33.4
2014 0.8 6.3
2010 22.4 34.5
2009 55.8 33.6 2013 2.8 8.1

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Source: Knight Frank, REIDIN
Source: Knight Frank, REIDIN

12 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 13
Residential values in Dubai | Q2 2023 AED psf

900 - 1,400

1,401 - 1,900

1,901 - 2,400

2,401 - 2,900
Apartments
2,901 - 3,400

3,401 - 3,900
Villas
3,901 - 4,800
AED 2,370 psf
27% Not applicable
y/y
44%
AED 4,720 psf y/y

14%
AED 2,230 psf y/y
AED 1,560 psf
13%
y/y

AED 2,390 psf


Palm Jumeirah
19%
AED 1,810 psf y/y
16% 27%
y/y Dubai Marina y/y
AED 1,660 psf
13%
AED 1,810 psf y/y
JLT AED 1,120 psf
13%
y/y
Downtown
AED 1,860 psf
The Meadows 24% Business Bay
y/y
24%
Emirates Hills AED 1,890 psf y/y AED 1,730 psf
District One 19%
Meydan City
y/y

The Springs

Jumeirah Village Circle Dubai Hills Estate


MRB City
15%
AED 2,420 psf y/y
AED 1020 psf AED 1,300 psf

14% 13%
y/y AED 1,090 psf y/y
7%
y/y
23%
AED 1,330 psf y/y 16% 8%
AED 1,230 psf y/y AED 1,320 psf y/y

14%
y/y AED 1,340 psf

Damac Hills (Akoya) Arabian Ranches Al Barari Source: Knight Frank, REIDIN
Apartments dominate supply
While supply remains tight in the city’s prime One of the most significant additions to the city’s
neighbourhoods, the pipeline of new homes under residential supply is the under-construction apartment
construction across the rest of the emirate is continuing to development by Damac: Akyon City Phase 1 Tower A,
grow. comprising 3,145 units, set to be completed by Q3 2023
in Business Bay. Elsewhere, Seven City in Jumeirah Lake
We expect 85,200 homes to be delivered by the end of Towers is expected to add around 2,700 homes to Dubai’s
2028, 69% of which are apartments (59,000 units). Almost total stock in 2027.
40,000 of these homes are expected to be completed this
year alone. In addition, Damac Properties is undertaking several villa
projects in Damac Lagoons and Damac Hills totalling to c.
While this figure is above the long-term average of around 5,100 units to be completed between 2024 and 2026.
35,000 home completions per year, we do not expect this
total to be met, with 30% to 40% likely being delayed until Emaar Properties is also undertaking several villa projects
next year; a common feature in Dubai’s residential market. mainly in MBR City and Arabian Ranches totalling c. 3,900
units to be completed by 2025.
Indeed of the 40,000 homes expected this year, just 8,600
have been handed over to date. Lastly, Dubai South is another submarket that is
undergoing several villa construction projects, The Pulse
Excluding 2023 and assuming all 40,000 homes are Beachfront 1, 2, and 3 to name a few. A total of c. 1,100
completed this year, 42,500 units are scheduled for units are due for completion by 2025
completion between 2024 and 2028, representing an
average of just 8,500 homes per year – a 75% reduction
on the long-term rate of home deliveries, strongly hinting
at continued upward pressure on prices, particularly as
the population continues to swell, recently surpassing 3.5
million residents. DUBAI RESIDENTIAL SUPPLY BY SUBMARKET (2023-2028)
No. of units

Apartments Villas

25,000

Dubai’s top submarkets for new supply (2023-2028)


20,000

Overall Apartments Villas


59K 27K
Apartments Villas
15,000

Rank Location Number of Location Number of units Location Number of units


units
10,000

1 MBR City 20,677 MBR City 17,621 Dubai Land 5,777

5,000
2 Business 9,746 Business Bay 9,746 Damac Lagoons 4,676
Bay

3 Dubai Land 7,213 Jumeirah Village 3,861 Jebel Ali 3,984 0 MBR City
Business Bay
Jumeirah Village

Jumeirah Lake Towers


Downtown Dubai
Dubai Creek Harbour
Jumeirah

Jebel Ali
Dubai Harbour
Dubai Land

Deira
International City
Umm Suqeim

Dubai Hills Estate


Damac Hills
Dubai Production City
Dubai Studio City
Trade Centre

Al Jadaf
Bur Dubai
Barsha Heights
Dubai Sports City
Palm Jumeirah
Dubai Festival City
Dubai Marina

Dubai Silicon Oasis


Al Barsha South
Arabian Ranches
Damac Lagoons
Dubai South
Jumeirah Bay Island

Tilal Al Ghaf
World Islands
Dubai Science Park
4 Jebel Ali 5,698 Dubai Creek Harbour 3,008 Dubai South 3,851

5 Damac 4,676 Downtown 2,914 MBR City 3,056


Lagoons

Source: Knight Frank, REIDIN Source: Knight Frank, REIDIN

16 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 17
In focus: project launches
IN FOCUS: PROJECT LAUNCHES
In addition to the under construction supply detailed (14%), Business Bay (14%), The Palm Jumeirah (11%), projects by number of units.
There are number
above,
Dubai’s
of new
we are also
total residential
developments
launches
tracking
stock
that are yet in
that
project
tothe
will contribute
launches
next
break
to
– these are
four to five years.
ground.
AlmostDubai
47 new
2023 alone
residential
Harbour (10%), projects were Village
and Jumeirah launched in Q1
Circle
(9%). with apartments continuing to dominate.
(JVC) In addition,
Other recent villa-only Dubaiinclude
launches
residential
Ranim 5, 6, 7, and
Expo City
developments.
8, with a total
theunveiled
Mudon Al
of 870 units allThese
the launch of several
willto include Expo
expected
c. 12,000
be completed by 2026.
units
Central: Mangrove and Sky apartments, 450 and 401
As well as the 30,000+ units detailed in our Dubai One of the biggest announcements of Q2 was the launched units
For a project to be classed as forthcoming supply, ground Damac Bay by Cavalli at Dubai Harbour (885 units), Design units, respectively. (not yet under
Residential Market Review - Spring 2023, an additional relaunch of Palm Beach Towers in The Palm Jumeirah In addition, The Valley – Riviana (486 units), May at
must12,000
be broken construction)
unitsand/or construction
were launched in Q2,must bewhich
83% of underway.
were Quarter Towers
with 1,265 at Dubai
units Design
to be District
delivered by Q4(558 units), DG1
2025. Arabian Ranches 3 (298 units), and South Bay 2 and 3 (358
apartments. This takes the total number of unit launches Living at Business Bay (247 units), Serenia Living at Palm units) at Dubai A further
South are532
alsovillas will that
projects be constructed in Expo Valley, with
were launched
Withtothis
42,000.
definition in mind, we are currently tracking Elitz(226
Jumeirah 2 by Danube Properties
units), Central Parkfollows
Towerswith
at788
Cityunits
Walk between April and June of this year.
completion expected by the end of 2026.
expected to be completed by 2026. Binghatti Gardenia
approximately 30,000 units in their launch stage. (458 units) are some of the apartment launches, to name
The majority (58%) of the launched projects were (700 units), Bayview (664 units), and Seapoint at Marsa
These are all excluded Total number of launched units
concentrated withinfrom oursubmarkets:
five key current supply pipeline
Al Barsha South a few. Dubai (661 units) all ranked among the top 5 launch
predictions.

One of the most significant recent launches has been


World Islands
Aldar Properties’ joint-venture with Dubai Holding to build
more than 9,000 residential units in the city’s suburbs.
15
The site of the new builds will be along the E311 and E611
corridors, with further details pending.
Dubai Marina Madinat Dubai Al Melaheyah
661 130

JLT
415
Palm Jumeirah
Al Wasl Jumeirah
1,361
148
Dubai Harbour
1,148
Al Barsha South Business Bay
1,695 1,645

Dubai Hills Estate


899
MBR City
Dubai Sport City 4
Jumeirah Village Circle
140
1,076

Al Hebiah Sixth Dubai Studio City


446 66
Dubai South Dubai Land
258 358 Arabian Ranches
298 Source: Knight Frank, MEED, REIDIN

The Valley
486
In focus: cash is still king EXPERT INSIGHT
When it comes to financing high-value property in Dubai, banks have their internal lending limits. Regular
mortgages typically go up to 35 million Dirhams, but there are private banking and commercial lending options
which can go much higher, depending on the client’s income and other assets. Residents and non-residents can
Cash purchasers continue to dominate Dubai’s most Despite minor fluctuations, the stronghold of cash buyers
secure finance from local and international banks that operate in the UAE. The loan to value and rates varies based
luxurious residential properties, and currently account for remains evident, reaffirming Dubai’s appeal for those
on where they are normally resident.
c. 80% of the total value of all transactions in Q2 2023. seeking to capitalize on secure and cash-driven real
estate transactions.
Typically, non-UAE residents will need a down payment of 40-50%, resident expats can secure a mortgage with a
This is shown by the percentage split between cash and
20%-30% down payment, and local Emiratis 15-25% depending on the property value or purchase price.
mortgage buyers over various quarters, which reflects this
ongoing trend.
There are several ways to finance high-value property purchases here in Dubai real estate, by securing finance
against the property itself based on personal income, leveraging overseas assets like Real Estate or stock portfolios,
or taking debt against an operational business. These tend to be the most common. If buying high-value, tenanted
rental properties, portfolios, or full buildings it’s also possible to use the existing rental income to secure finance.

Bradley Rands
Partner, Head of Mortgage & Debt Advisory

Dubai residential transactions - cash vs. mortgage buyers

Cash buyers Mortgage buyers

Q2 2023

Q1 2023

Q4 2022

Q3 2022

Q2 2022

Q1 2022

Q4 2021

Q3 2021

Q2 2021

Q1 2021

0% 20% 40% 60% 80% 100%

Source: Knight Frank, Property Monitor

20 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 21
Population and economic
growth drive price increases
Dubai’s headline-grabbing real estate market has been Dubai’s non-oil sector PMI reading stood
supercharged by positive sentiment, a key ingredient in at 55.7 in July, marginally down on June
the Middle East. (56.9), but remaining in expansionary
territory for over two-and-a-half years (S&P
This positivity received a further boost with the Global). Businesses remain upbeat about
announcement of D33, Dubai’s Economic Agenda. the future and are continuing to recruit and
grow, the impact of which is being felt in
Aside from outlining a new roadmap for the emirate to the office market, which is facing a Grade
double its foreign trade and emerge as the world’s fourth A supply crunch. Read more in our Dubai
most prominent financial centre behind New York, Office Market Review – Summer 2023.
London, and Singapore by 2033, the population by this
stage is also expected to approach six million, up from 3.5 Dubai’s GDP grew by 2.8% in the 12-months
million today – a critical consideration in our long term to the end of Q1. While lower than the
outlook. 4.4% recorded in the preceding 12-months,
recent growth is coming off a higher base.
The predicted growth in the city’s inhabitants will warrant Retail, trade, aviation, and hospitality all
the need for a large-scale residential development boom. continue to dominate, the latter of which
is demonstrated through the fact that the
Indeed, the city’s current housing stock will virtually need city’s nearly 150,000 hotel rooms recorded
to double if the population targets are to be met, which the an average occupancy of 78% during H1,
government expects to swell to 7.8 million by 2040. the highest level in the world. And this was
supported by 8.55 million tourist arrivals, a
The pressure of the growing population is already evident 20% rise on H1 2022, and the best first half
in the real estate market, with residential values climbing on record.
over the last three and half years – while apartment prices
still lag the 2014 peak by as much as 13.5%, villas now cost The number of customers registered by
as much as they did nine years ago. the Dubai Electricity and Water Authority
(DEWA) has grown by 5.5% in H1 when
The key driver for this disparity is the global race for space compared to the same period last year.
and the dearth of villas across Dubai, particularly at the While this covers all real estate sectors, it is
upper end of the market. yet a further indication of the growth in the
emirate's population.

“The predicted growth in the city’s


inhabitants will warrant the need for a large-
scale residential development boom.”

22 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 23
Rents keeping pace with EXPERT INSIGHT
capital values Rental growth continues to closely mirror sales price trends, avoiding yield compression. Prime single-let apartment
yields (6.25%-7.50%) remain slightly higher than villa yields, however, some beach-front neighbouhoods that attract
holiday makers can achieve significant premiums.

Stephen Flanagan
Away from the sales market, rental growth remains Ranches (AED 82 psf), average lease rates have climbed by Partner – Head of Valuation & Advisory, MENA
virtually in lockstep with sales prices, meaning there nearly 31% and 17% in the last 12 months, respectively.
has been no yield compression. Yields for single-let In addition, apartment rents have also grown, rising by
apartments (7.4%) remain just ahead of what can be 23% since last year, and currently stand at AED 94 psf,
achieved for villas (6.0%). representing an increase of 3.6% from Q1. Business Bay
(28%) and The Palm Jumeirah (18%) lead the pack with the
Average rents in the city currently stand at AED 92 psf, a strongest rental growth since last summer.
rise of 3.7% from Q1 and 22.3% higher than last summer.
Rents for villas in The Palm Jumeirah have increased by Overall, apartment lease rates are now 32% above January
about 15% compared to Q2 2022 and by just over 110% 2020 levels but are still some 10% lower than the last
overall since January 2020. Rents here currently stand at market peak in 2014.
AED 151 psf.
Villas, on the other hand, have seen average rental rates
In the mainstream market, more affordable villa locations rise by close to 65% over the same period and are now
are also recording similarly high growth in lease rates. almost 13% higher than the last peak in 2014.
For instance, at The Springs (AED 83 psf) and Arabian

LEASING MARKET GROWTH

All Residential Apartments Villas

AED AED AED


92 94 89
psf psf psf

12.7%
Above 2014 peak
(villas)

3.7% 3.6% 4.5%


Q/Q Q/Q Q/Q

22.3% 23.3% 23.6%


Y/Y Y/Y Y/Y

-9.9%
Below 2014 peak
(apartments)

34.9% 32.0% 64.9%


Since Q1/20 Since Q1/20 Since Q1/20

Source: Knight Frank, REIDIN

24 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 25
CONTACTS

Andrew Cummings Imran Hussain, BSc, MRICS Faisal Durrani


Partner - Head of Prime Residential, Dubai Partner - Residential Valuations, MENA Partner - Head of Research, MENA
[email protected] [email protected] [email protected]
+971 56 122 4229 +971 50 383 2491 +44 7885 997888

Shehzad Jamal Dean Foley Alaa Aljarousha


Partner - Strategy & Consultancy, MEA Associate Partner - Residential Project Sales Manager - Research, UAE
[email protected] & Marketing, UAE [email protected]
+971 56 410 1298 [email protected] +971 56 548 9626
+971 50 106 0784
Stephen Flanagan, MRICS Lubaba Fakeih
Partner - Head of Valuation & Advisory, MENA Lars Jung-Larsen Geospatial Analyst, MENA
[email protected] Partner - Luxury Brands, MENA [email protected]
+971 50 813 3402 [email protected] +966 55 558 3659
+971 50 378 0902
Tim Holmes
Partner - Commercial Valuations, MENA Bradley Rands
[email protected] Partner - Head of Mortgage & Debt Advisory, MENA
+971 50 327 0274 [email protected]
+971 56 420 6734

RECENT PUBLICATIONS

Destination Dubai 2023 Abu Dhabi Residential Market Dubai Office Market
Review | Summer 2023 Review | Summer 20223

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