Up To 200% Return: Dubai Property Turning Sellers’ Market As Investors Take Advantage Of 3-Year Price Rally
Dubai’s residential market is increasingly turning into a seller market to cash in on the gains made over the past three-year rally in property prices.
Industry insiders say the property price rally is showing signs of slowdown and growth reaching a plateau in the near future is prompting some investors to sell and invest in new upcoming areas that could offer better returns.
Property prices in Dubai have increased multiple times, crossing the 2014 peak last year due to unprecedented demand witnessed in the post-pandemic period.
Interestingly, buyers who bought property during the pandemic year have seen their assets’ prices appreciated by up to 200 per cent and many of them are now turning into sellers to take advantage of the gains achieved over the past few years.
According to a study by Betterhomes, sellers are currently positioned advantageously, capitalizing on a surge in property transactions and escalating prices driven by heightened buyer demand.
“One of the key benefits for sellers in this swiftly expanding market is the potential for a lucrative return on investment, with property owners currently enjoying favourable rates. Additionally, selling property in Dubai offers the perk of zero capital gains or property taxes. The rapid growth in Dubai’s population further amplifies property demand and prices, creating an advantageous landscape for sellers, particularly areas with limited supply,” said Louis Harding, managing director, Betterhomes.
Toni Abou Jaoude, sales manager at Betterhomes, said optimal selling occurs when the achieved price results in a substantial gain, enabling reinvestment in additional properties post-sale.
“This serves as strong motivation for sellers to capitalise on the current market conditions and use their gains to reinvest in more properties,” he said.
Abou Jaoude said by analysing data trends, a seller’s market in Dubai signifies robust demand, limited inventory, and a consistent trend of delivering elevated returns to both investors and end-users.
“However, over the past two years, the demand for purchasing among end-users has doubled, driven by an unprecedented escalation in rental prices across the city. This makes it a seller’s market for those looking to realise profits on their real estate investments,” he said.
Abou Jaoude revealed that properties purchased during the pandemic year have experienced a significant increase in value, ranging from a conservative estimate of 50 per cent to as high as 200 per cent in certain areas.
Betterhomes’ sales manager elaborated that the top-performing areas in terms of returns are downtown, District1 MBR, Jumeirah – including communities like Bulgari, La Mer, Nikki Beach, MJL, and private Jumeirah villas – Dubai Hills, Palm Jumeirah, and DIFC.
HEADWINDS IN 2024
Mayed Alrashdi, a research analyst at Emirates NBD, said the emirate’s property market ended 2023 on a resilient note, achieving significant milestones even as interest rates peaked, on the back of population growth and the influx of high net-worth individuals.
However, he sees Dubai’s real estate market could face “some headwinds in 2024, including continued high-interest rates, declining affordability for the average household, and a growth in the supply of new units.”
He added that the impact of high interest rates last year was reflected in a 7 per cent year-on-year decline in the total value of mortgage transactions to Dh125 billion.
“The rapid price growth, coupled with the high interest rate environment has affected the affordability of housing for the average household. The anticipated increase in supply, comprising 41,500 apartments and 18,500 villas in 2024, should help to stabilise residential real estate prices this year,” he added.
