A report by Asteco Real Estate Services revealed that real estate projects in Dubai continue to be launched at a strong pace, including a wide range of low-rise buildings, skyscrapers and large residential communities. Asteco expects to deliver an additional 25,000 residential units in Dubai in the second half of this year.
The real estate market report for the second quarter of 2024 confirmed that Dubai’s strong economic performance and attractive lifestyle remain major polarizing factors for expatriates, noting that the emirate has solid elements and foundations, driven by the high value of investments in the real estate market, continuous economic growth, infrastructure development, and population growth.
Although apartment and villa rental rates registered quarterly increases of 3% and 2% respectively, annual rental growth for apartments was 8% and 4% respectively. This increase is primarily due to the Real Estate Regulatory Agency’s (RERA) revised rental index, which allows landlords to increase rents upon renewal,” the report said. “The office rental market, particularly for Grade A properties, continued to flourish, driven by strong demand and limited supply,” it added.
The upward pressure on rents is expected to continue until new units enter the market or business conditions change. The report confirmed that the sales market in Dubai continues to witness strong growth, driven by the continued launch of projects that enhance off-plan sales transactions.
While second quarter 2024 recorded a steady 2% growth in average sales prices, several areas, including Jumeirah Village and Business Bay, saw above-average sales price growth. This was attributed to a general increase in demand, and in part to a significant increase in off-plan launches and newly completed projects.
The report explained: “These new projects are often of higher quality than previous projects in these two areas and are priced accordingly. The off-plan property market continued to maintain significant momentum, with local and international investors snapping up newly launched units in droves, promising strong returns on investment in a favourable tax environment.”
In addition, some financiers have started offering enhanced options for off-plan properties, allowing buyers to secure up to 10% additional financing during construction. This additional financing is typically available for projects with at least 50% construction growth, providing some degree of risk mitigation for the financier.