Dubai's Residential Market Driven by Off-Plan Sales

According to a new industry report, demand for off-plan homes in Dubai reached record highs in May, with the Emirate experiencing a 41.6% month-on-month increase in new contract registrations, accounting for over 10,000 transactions and 69.4% of total residential sales.

According to the ‘ValuStrat Price Index – Dubai Residential Capital Values’, the emirate experienced a 76.3% year-on-year increase in off-plan registrations for residential properties last month, with communities such as Jumeriah Village Circle and Meydan One driving up demand.

According to the report, Discovery Gardens and Dubai Hills Estate set new records in May for the most off-plan homes sold in a single month.

The volume of ready home transactions has increased by 8.1% year on year and 45.9% since April, with the majority of homes sold in Jumeirah Village Circle (8.3%), Business Bay (6.6%), Dubai Marina (5.9%), Downtown Dubai (5.3%), and Jumeirah Lake Towers (3.9%).

In total, 16 transactions for ready properties priced over 30 million UAE dirhams were completed in Palm Jumeirah, Dubai Marina, Jumeirah Bay Island, Emirates Hills, and District One.

Capital values

Despite the flooding caused by Dubai’s record rainfall in April, which affected several communities, strong demand for residential properties prevented any significant impact on home valuations, according to ValuStrat.

Villa capital values increased at similar monthly rates in May, with Palm Jumeirah properties seeing an annual capital value increase of 41.7%. Other major annual gains were seen at Jumeirah Islands (41.1%), Dubai Hills Estate (37.5%), Emirates Hills (32.5%), and The Lakes (32.1%).

According to ValuStrat, most established villa communities in Dubai have exceeded their previous capital value peaks from 2014, and the Palm Jumeirah became the first apartment area to do so this month.

Monthly apartment prices increased by 1.8%, 0.2% more than in April, for a 22.4% annual growth rate. The following areas had the highest apartment capital gains compared to the previous year: Discovery Gardens (34%), The Greens (32.6%), Palm Jumeirah (30.9%), Al Quoz Fourth (29.1%), and The Views (28.1%).

The VPI report also revealed a correlation between rising average prices per square foot and shrinking average home sizes in Dubai, raising concerns about property valuations.