Dubai property in Q4 2023: the market moved to new districts

In the last three months of 2023, Dubai Maritime City sold 1,356 homes. A year earlier it had sold about a sixth of that. 99.3% of those sales were off-plan, so almost nothing there was finished yet. The district reached the top ten on new launches alone.

Dubai South arrived with it, at 1,247 sales and a median of AED 1,093 per sq ft. Neither had been among the ten busiest areas in any earlier quarter of the year. Higher up the price range, Dubai Marina stayed the biggest area by value, at AED 11bn.

The quarter as a whole was a touch quieter than the summer: 41,337 sales against 42,693, down 3.2%, worth AED 94.3bn. The base rate stayed at 5.40% throughout. Demand was still there. It was spreading into districts that hadn't been on the list before.

The numbers

The median price was AED 1,493 per sq ft, up 3% on Q3. Year on year it was up only 0.7%, and that needs explaining, because across the whole year our median rose 8.7%, from AED 1,305 per sq ft in 2022 to AED 1,418 in 2023.

The trend line explains it. Our median climbed every quarter of 2023, from AED 1,332 in Q1 to AED 1,493 in Q4, a rise of 12.1%. The weak YoY figure comes from the starting point. Q4 2022's median was high, at roughly AED 1,483, and Q1 2023 then opened 10.1% below it. Compare Q4 with Q4 and you're measuring against that high point.

How we worked it out

We count residential sales of apartments and villas registered with the Dubai Land Department, leaving out land, whole buildings and commercial units.

A median is the middle deal when every sale is lined up by price. An average adds every price and divides by the number of deals. AED 94.3bn across 41,337 sales is about AED 2.28m on average. The median deal was AED 1.45m, because a small number of expensive homes lift the average and leave the median alone.

A median price per sq ft follows what sold, not what any one home is worth. Fill a quarter with prime launches and the median rises. Fill it with cheaper suburbs and it falls, even if every individual home has gained. That's why we don't read the 0.7% as prices standing still.

The arithmetic: AED 1,493 divided by 1.007 gives about AED 1,483 for Q4 2022. AED 1,493 divided by AED 1,332 gives 1.121, so +12.1% from Q1 to Q4.

What sold, and where

Off-plan fell back to 56.5% of sales, from 61.1%, but still took 59.5% of the value. Ready homes had their best price quarter of the year at AED 1,163 per sq ft, up 5.7% from AED 1,100 in Q3. Villas rose too, to AED 1,104 per sq ft from AED 1,031.

October was the busiest month of the quarter, with 14,245 sales. November and December were steady at around AED 32bn each.

One-beds were 43.5% of apartment sales and two-beds 26.6%. Apartments with four bedrooms or more fell to 1.1%, their lowest share of the year.

Jumeirah Village Circle had its biggest quarter of 2023: 5,311 sales, or 12.8% of the whole market. Downtown Dubai came back, up 61.7% on a year earlier, at a median of AED 2,652 per sq ft. Dubai Marina was down 7%. Wadi Al Safa 5 stayed in the top ten, but at AED 869 per sq ft and with only 49.2% of sales off-plan, against 74.6% in Q3.

What we noticed

• Value and volume ranked areas differently. Dubai Marina led on value at AED 11bn from 2,804 sales, ahead of Palm Jumeirah at AED 8.8bn from only 640. At the top of the market, a modest number of deals moves value far more than it moves the count.
• The top end had a busy year. We counted 295 home sales of AED 36.7m (US$10m) or more in 2023, worth AED 20.4bn. 59 of them came in Q4, the quietest quarter of the year at that level. The biggest was AED 500m, at Como Residences on Palm Jumeirah in December.
• Finished homes caught up. Our ready median rose 5.7% in the quarter, and we counted 17,974 ready-home sales in Q4, the most of any quarter in our records back to 2019. As ready prices rise, the gap to off-plan narrows: AED 583 per sq ft this quarter, against AED 622 in Q3.
• Rents paused. Our median annual rent across 182,766 Ejari contracts was AED 60,000, down from AED 62,000 in Q3 but still 9.1% above a year earlier. Renewals were 55.3% of contracts, their highest share of the year.
• Supply was on its way. On the official project register, projects finished in 2023 held about 36,000 homes, and the off-plan sold in 2022 and 2023 was still to come.

For developers

• A new district can take volume fast when the price fits. Dubai South sold 1,247 homes at AED 1,093 per sq ft, well under the citywide median of AED 1,493. Price to the area you're building in, and treat the citywide figure as background.
• With 99.3% of Dubai Maritime City's sales off-plan, there's barely a resale market there yet to support prices. Early buyers will judge you on your handover record instead.
• Demand for large units thinned, with four-bed-plus at 1.1% of apartment sales. Test big apartments with a small release first.
• As the off-plan sold since 2022 reaches handover, launches will compete more and more with finished stock. A clear construction schedule is worth more than another month of instalments.

For investors

• A 0.7% YoY median for the quarter and an 8.7% rise for the full year can both be true. Ask what's being measured before you act on either.
• In a new district the only price evidence is the developer's own list. Compare it with established areas nearby, and expect a resale market to take years to build.
• Rents dipped in the quarter at the same time as completions were set to rise. If your plan depends on rents growing at 2023's pace, check it still works with rent flat.
• Central bank rules cap off-plan mortgages at 50% of the price, so at least half of an off-plan purchase comes from your own funds. Plan for that alongside the 4% transfer fee.

The story continues in Q1 2024, and the quarter before this one is Q3 2023. If you're weighing a purchase, our investor page explains how we can help.