In the third quarter of 2023, Dubai’s real estate market experienced unprecedented growth, reaching all-time highs, as per a recent study by ValuStrat. Here, we delve into the key findings and insights from this report.

The Villa Price Index (VPI)

The Villa Price Index (VPI), a crucial indicator of Dubai’s housing sector, witnessed a remarkable surge of 6.1 percent over the previous quarter, soaring to 96.6 points on the ValuStrat Price Index. This increase represented an impressive 15.1% rise over the same period in the previous year.

Villa prices demonstrated significant growth, with a 19.8 percent year-over-year (YoY) increase and a 7.6 percent quarter-over-quarter (QoQ) rise, reaching a total of 123.6 VPI points. Notably, this surpassed the peaks recorded in 2014 by 2.6 percent. Some of the best-performing properties this quarter were located in Palm Jumeirah (9.5 percent), Jumeirah Islands (9.5 percent), Dubai Hills Estate (9.3 percent), and Mudon (9 percent).

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Apartments in Dubai’s Real Estate Market

Apartments also saw positive growth, with a 4.8 percent quarter-over-quarter (QoQ) gain in the VPI, culminating at 79.7 points. This indicated an 11% year-over-year (YoY) gain; however, it still remained 29.2% below the levels recorded in 2014.

Within the apartment category, the top quarterly performers included properties in Dubailand Residence Complex (6.6 percent), Palm Jumeirah (6.7 percent), The Greens (7.3 percent), and Discovery Gardens (7.5 percent).

Prime Property Valuations

Prime property valuations experienced a surge, increasing by 16.5 percent YoY and 6.6 percent QoQ to reach a combined total of 106.2 points for both villas and apartments. Remarkably, prime villas witnessed capital gains of 20.2 percent YoY, reaching a new 10-year high of 135.7 points.

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New Construction in Dubai

The research revealed a significant amount of new construction activity in the real estate sector. According to the data, 53,715 newly constructed units were expected to enter the market in 2023, based on developer completion schedules. By the end of the first nine months of the year, 21,507 apartments and 2,068 villas had already been completed, equating to 44% of the initial projections for the full year.

Off-Plan Property Market

In the off-plan housing sector, the average purchase size increased by 13% YoY, reaching AED 2.5 million. The average transacted price for off-plan properties in the city was AED 20,035 per square meter or AED 1,861 per square foot. Off-plan contract registrations (Oqood) rose by 2.5% QoQ and 19.1% YoY, totaling AED 36.9 billion in value. The third quarter also marked a record number of off-plan property transactions, surpassing monthly records individually set by Mudon, Business Bay, and Dubailand Residential Complex.

Ready-to-Move-In Apartments

Ready-to-move-in apartments saw over 11,000 transactions in Q3 2023, marking a YoY increase of 17.7 percent. While it was slightly down from the previous quarter by 5%, these properties had an average purchase amount of AED 2.3 million, a YoY decrease of 1.4 percent. Notably, 41.5 percent of these sales, primarily apartments, were priced below AED one million, with 52 transactions exceeding AED 30 million within the same period.

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Office Space Sector

The Dubai office space market demonstrated impressive growth, with annual capital gains reaching 25.5%. The ValuStrat Price Index increased by 7.3 percent on a quarterly basis, reaching 103 points from a 100-point base in Q1 2015. The average weighted cost of an office in Dubai was AED 14,230 per square meter or AED 1,322 per square foot. Several Dubai Central Business Districts (CBDs), including Downtown Dubai, Barsha Heights, DIFC, Business Bay, and Jumeirah Lake Towers, reported double-digit annual growth.

In terms of office space, 2.7 million square feet were expected to be completed by 2023, with an additional 136,500 square feet slated for completion in 2024.

This comprehensive report highlights the remarkable growth and resilience of Dubai’s real estate market in Q3 2023, with robust performances in various segments, providing valuable insights for investors and stakeholders alike.