Dubai property in Q2 2023: same volume, bigger tickets

Put the first two quarters of 2023 side by side and the sales counts barely differ: 36,570 homes sold in Q1, 36,771 in Q2. That's 201 more deals, a rise of 0.5%. Stop there and you'd call it a flat quarter.

It wasn't. Almost the same number of sales brought in AED 85.5bn, up from AED 82.3bn, and the median price rose 4.4% to AED 1,391 per sq ft. The extra money went into dearer homes. Much of it went into Dubai Marina, where the median price per sq ft jumped by a third in three months.

Spring brought another rate rise, to 5.15% on 4 May. At the end of May the Palm Jebel Ali masterplan was approved, which mattered more later in the year than it did at the time.

The numbers

Against a year earlier, sales were up 47.4%, value up 56.6% and the median price per sq ft up 10.3%. Sales growth had slowed from Q1's 63.8%, though. The 2022 surge was turning into the number to beat.

The trend line turned up after Q1, from AED 1,332 to AED 1,391 per sq ft. Inside the quarter, April was slow and May carried it.

How we worked it out

Our figures are residential sales of apartments and villas registered with the Dubai Land Department. Land, whole buildings and commercial deals are excluded, which is why our totals sit below the official all-transaction numbers.

The quarter-on-quarter change first. Sales went from 36,570 to 36,771: divide one by the other and you get 1.005, or +0.5%. Value went from AED 82.3bn to AED 85.5bn, which is +3.9%. If value grows nearly eight times faster than the count, the typical deal got bigger.

The averages show it. AED 85.5bn across 36,771 sales is about AED 2.33m a deal, against about AED 2.25m in Q1. The median deal was AED 1.42m. An average is the total divided by the number of deals, so a few expensive homes pull it up. The median is the middle deal when you line them all up by price, and those few barely register.

On price per sq ft, AED 1,391 minus AED 1,332 is AED 59, and 59 divided by 1,332 is 4.4%. "YoY" (year on year) compares with the same quarter of 2022, so the 10.3% is Q2 2023 against Q2 2022.

What sold, and where

Off-plan fell to 52.7% of sales, from 56.7% in Q1, so ready homes took more of the quarter. Their median was AED 1,104 per sq ft, against AED 1,665 for off-plan. Deal sizes moved up. Homes between AED 3m and AED 5m were 13.1% of sales, up from 11.5%, and the AED 5m to AED 10m band rose from 4.1% to 5.5%. Add the top band and a fifth of all deals were above AED 3m.

The bedroom split hardly changed. One-beds were 43.2% of apartment sales, studios 20.5% and two-beds 26.2%. Buyers weren't trading up to bigger flats across the board. The bigger tickets came from location and from the top end.

Jumeirah Village Circle stayed top with 4,276 sales at AED 1,089 per sq ft. Dubai Marina was close behind with 4,119, up 71.6% on a year earlier. Its median price per sq ft went from AED 2,674 in Q1 to AED 3,557, a 33% jump in three months.

We don't think Marina flats got a third dearer in one quarter. What changed was the mix. 58.4% of Marina's Q2 sales were off-plan, up from 44.1%, and new towers sell for more than the older stock around them. By value it was the biggest area of the quarter, at AED 15.9bn.

Two big names slipped. Business Bay sales were down 14% on a year earlier and Downtown Dubai down 19.5%. Dubai Hills Estate went the other way, up 166.1%, with 79.1% of its sales off-plan.

What we noticed

• Villas took a smaller share but more money. They made up 13.1% of sales, down from 14.3% in Q1, while their median edged up to AED 1,032 per sq ft. Against Q2 2022, villa sales were up 8.4% and their value up 35.6%, so the money grew far faster than the count.
• April was soft at 9,622 sales. May was the busiest month of the quarter at 14,240, and June held up at 12,909.
• Rents kept rising, more slowly. The median annual rent across 150,564 Ejari contracts was AED 58,000, up 9.4% on a year earlier, against 12% in Q1.
• UAE corporate tax, 9% on business profit above AED 375,000, applies to financial years starting on or after 1 June 2023. Cabinet Decision 49/2023 keeps an individual's income from selling or letting property outside it, as long as it isn't earned under a trade licence. For a private owner with a flat to let, nothing changed.
• The Palm Jebel Ali masterplan was approved on 31 May. It produced no sales yet, but it put a new top-end address on the map.

For developers

• Buyers moved up the price bands without adding bedrooms. Location and the top end carried the price.
• In an area like Dubai Marina the median moves with the mix. If you're pricing a new tower, use the area's off-plan median, not the blended one.
• Ready stock took share from off-plan this quarter. A launch competes with finished homes buyers can walk round today, at about AED 560 less per sq ft citywide.
• April's dip shows how much timing matters. Plan launch dates around the slower months rather than hoping for the best.

For investors

• When an area's median jumps 33% in a quarter, check what sold before you price anything off it. One new tower can move the median without any existing flat changing in value.
• Ready homes sold at a median AED 1,104 per sq ft against AED 1,665 off-plan. The ready home earns rent now. The off-plan one asks you to wait.
• Rent growth slowed from 12% to 9.4% in a single quarter. Run your numbers on today's rent, not on last year's rate of increase.
• If you own property in your own name, corporate tax didn't change how your rent is treated. Holding through a company is a different question, and one for a tax adviser.

Our review of the quarter before is Q1 2023, and the next one is Q3 2023.