As more professionals move to Dubai for better opportunities, apartment demand is rising.
This is in contrast to the COVID-19 epidemic when villas and townhouses sold well as people sought larger spaces due to travel and outdoor activity limitations.
Dubai apartment demand has outpaced availability for some time due to population increase, Khaleej Times said.
Dubai added roughly 100,000 residents in 2023, and 50,000 residential units hit the market. The emirate added 25,700 residents in Q1 2024, compared to 6,500 units.
Around 58% of property buyers in April sought apartments, while 42% sought villas/townhouses. However, 79% of tenants wanted flats and 21% wanted villas/townhouses, indicating a surge in apartment demand compared to previous months.
“Despite demand fluctuations, the real estate market is strong. An unexpected shift in consumer choices favours apartment homebuyers. This contrasts with villa demand after the pandemic, especially in recent months,” said Cherif Sleiman, chief revenue officer of Property Finder, who expects the market to stay active after announcements like the move from Dubai International Airport to Al Maktoum International Airport, which will boost demand in growing areas.
Over the last quarter, mortgage leads and buyer registrations have increased due to the growing population and more people moving to the area, said John Lyons, managing director of Espace Real Estate.
A Property Founder survey found that 64% of tenants preferred furnished flats with ready interiors, while 33% preferred unfurnished ones. About 55% of villa/townhouse renters browsed unfurnished homes, while 44% preferred equipped ones.
The estimate for professional population growth and market supply suggests that more people will hunt for apartments shortly, driving up demand, rentals, and prices.
New Demand In Developing Areas
Due to Dubai Metro’s Blue Line and the move of operations from Dubai International Airport to Al Maktoum International Airport, industry executives expect higher demand for apartments and villas in Dubai South and on either side of Sheikh Mohamed bin Zayed Road and Emirates Road.
Most demand will be for off-plan units in new areas like Dubai South, JVC, Marjan, Dubailand, Damac Hills, International City, Silicon Oasis, and others on key arteries leading to Al Maktoum International Airport because investors will get higher returns due to population growth due to airport development, new residential and hospitality projects.
Property Finder reported that off-plan transactions continued to grow, with 7,203 transactions and a 77.09% YoY increase in value to Dh13.9 billion from Dh7.8 billion in April 2023.
Due to the range of choices, healthy pipeline, and potential high return on investment, off-plan solutions are continuing to appeal. Recent regulatory measures, such as requiring a primary unit permit to promote such properties, aim to improve supply quality, said Sleiman.
Over the past year, high rental prices and a more accessible mortgage market have led tenants to become homeowners, according to John Lyons. People weigh the high cost of rent against the cost of ownership when deciding to extend their lease. He said that mortgage rates are cheaper and visa rules have been loosened, making home buying easier.