Changes in the Dubai real estate market in 2023

In 2023, the number of real estate transactions in Dubai increased by more than a third, compared to the record-breaking year of 2022, and the total sales value doubled. Among the key market trends is the increased demand for luxury properties and off-plan projects. The rental market continues to grow as well. These trends are expected to persist into 2024.

According to the Dubai Land Department (DLD), in 2023, the emirate witnessed 133,300 real estate transactions, 37% more than in 2022. This is the highest number ever recorded. The total value of these deals reached AED 412B (USD 112.7B), which is 56% higher than the previous year.

The key trends in Dubai’s real estate sales market in 2023 were:

• Increased property prices
• Increased demand for off-plan properties
• Increased demand for luxury real estate

In 2023, the cost of both completed and under-construction properties rose:

According to a 2023 Bayut report, the cost per square foot in Dubai’s budget segment increased by 17%, mid-range real estate by 4-22% and premium properties by 21%.

According to Property Finder, in 2023, a record number of transactions for under-construction real estate were concluded – almost 69,000 in all. This is more than double the year before, a 59.4% increase.

The total value of transactions for off-plan properties reached nearly AED 160.5B— 72% more than in 2022.

The most popular areas to buy off-plan apartments were in JVC, MBR City, Dubai Marina, Business Bay and Dubai Hills. Under-construction villas were most frequently purchased in DAMAC Lagoons, The Valley, Arabian Ranches 3, Dubai South and Mudon.

In 2023, Dubai’s real estate market witnessed a surge in demand for luxury housing, largely due to the significant influx of wealthy individuals into the emirate over the last two years.

According to Bayut, the most sought-after area to purchase luxury apartments was Dubai Marina, where the cost per square foot increased by 9.1% over the year, and the average transaction price rose by 16.6%.

Business Bay and Downtown Dubai also topped the sales charts for premium segment apartments.

In the premium villa market, the most in-demand areas were Arabian Ranches, Dubai Hills Estate and DAMAC Hills, where costs increased by 9.2-20.5%. The most expensive transaction in this segment was in Tilal Al Ghaf and was conducted by Metropolitan Group in 2023. The company sold an ultra-luxurious 8-bedroom villa that was nearly 30,203 sq. ft in size for AED 90.5M (USD 24.6M).

In 2023, Dubai’s rental market maintained a high demand for housing, reinforcing the trend of increasing rental rates. This is attributed to the influx of new residents: according to the Dubai Statistics Centre, the emirate’s population grew by more than 100,000 people over the course of a year. The city’s appeal as a global business hub and one of the most comfortable places to live continues to stimulate the demand for rental housing.

According to a Bayut report, the cost of renting affordable real estate increased by 4-28% across different areas. In the middle and premium segments, price growth was 23% and 31%, respectively.

A total of about 800,000 rental contracts were concluded in 2023, approximately 4% more than in 2022. According to the Dubai Land Department, nearly half – 48% – of all rental contracts that year were signed by new tenants, while the rest were renewals.

According to DXB Interact, the average cost of renting an apartment increased by 20%, and villas by 27%. This is a stable trend: the previous year saw rates increase by 15% and 5%, respectively.

The most popular areas to rent are:

• In the affordable housing segment: Al Nahda, Deira, Mirdif, DAMAC Hills 2, Dubai International City, Dubai South;
• In the mid-price segment: JVC, Bur Dubai, Dubai Silicon Oasis, Arabian Ranches 3;
• In the premium segment: Dubai Marina, Business Bay, Downtown Dubai, Dubai Hills Estate, Al Barsha, Jumeirah.

In 2023, amid Dubai’s surging population growth, there was sustained demand for both buying and renting property, resulting in a record-setting number of transactions. Both property values and rental rates significantly increased over the year. As Dubai continues to attract new residents and investors, the market growth trend is expected to continue into 2024.