Top Areas for Off-Plan Property Investment in Dubai: Expert Insights

Friday, 26 July 2024

In the second quarter of 2024, Dubai’s real estate market experienced a significant boost in off-plan property sales, as highlighted by recent research from Haus & Haus. The growing demand for new constructions is evident, with 63% of all property sales now occurring off-plan. Despite only a 5% increase in the number of launched units, transactions surged by an impressive 212% year over year.

Top Areas for Off-Plan Investment

Jumeirah Village Circle (JVC)

• Dominance in Transaction Volume: Jumeirah Village Circle continues to lead in transaction volume for the fourth consecutive quarter, solidifying its position as the most popular destination for off-plan investments.
• Q2 2024 Highlights:
  • 3,102 deals totalling $805 million (AED 2.95 billion).
  • Family-friendly neighbourhood with a 5-12% rise in prices per square foot, as reported by Bayut’s H1 2024 report.
  • Apartments in District 10 are particularly attractive for off-plan investments, with prices ranging from AED 250,000 to AED 2.6 million.
  • Approximately 30,000 new residential units are expected, potentially stabilizing market dynamics despite recent price increases.

Mohammed Bin Rashid City (MBR City)

• Significant Growth: MBR City saw a remarkable increase in its off-plan market, with 1,998 transactions worth $664 million (AED 2.4 billion) compared to 2023.
• Key Developments:
  • 19,845 apartments expected by 2028, including major projects like The Waterway by Prestige One and The Crest at Sobha Hartland.
  • Steady rise in price per square foot in areas like Sobha Hartland and Dubai Hills Estate.
  • One- and two-bedroom homes dominate transactions, with average costs rising by 15% and 17%, respectively.
  • Districts like District One, District 11, and District 7 remain attractive for off-plan investments, offering returns ranging from 7.45% to 48.9%.

Business Bay

• Impressive Transaction Value: Business Bay reported transactions worth AED 4.8 billion (approximately $1.4 billion), showcasing its strong demand and increasing prices.
• Investment Yield: The average investment yield remained steady at 7.8%, with luxury buyers showing significant interest in off-plan projects such as Bays 101 and Jumeirah Living Business Bay.
• Future Outlook: Around 20,000 new residential units are anticipated to be added to the area in the coming years.

Dubai South

• Rising Popularity: The planned expansion of Al Maktoum International Airport has heightened Dubai South’s appeal.
• Market Performance:
  • Townhouse sales surged by 75%, while villa sales skyrocketed by 360% within a year.
  • Flats continue to dominate the market, accounting for 91% of sales.
  • An additional 14,000 residential units are expected to be introduced in the near future.

Off-Plan Market Outlook

Dubai’s off-plan market is on an upward trajectory, with approximately 52,000 units expected to be completed this year and 78,361 new units launched thus far. Despite this growth, concerns have been raised about the impact of this influx on market dynamics and real estate prices in the medium term.

• Market Trends:
  • The Q2 2024 Dubai Residential Real Estate Market Report by Real Trust UAE notes a second consecutive quarter of declining median off-plan sales prices, with a 0.6% drop from Q1.
  • Some sellers, struggling to secure initial prices, are opting to take losses rather than pay additional development fees.
  • Despite these challenges, off-plan residential registrations saw a 76.3% year-over-year increase, according to the ValuStrat Price Index, indicating sustained long-term potential and strong investor confidence.