Dubai’s secondary home sales drop 10.2%; rent hikes moderate

September 19, 2023 563

Off-plan segment now dominates property market

Dubai’s secondary property market is showing signs of slowing down after experiencing explosive growth on the back of high investor demand.

Secondary market sales in Dubai dropped by 10.2% in August 2023 compared to the previous year, according to real estate adviser CBRE.

The tenancy market has also showed a “slight moderation”, with average rents in Dubai rising by 21.7% in the year to August 2023, down from the 22% growth recorded in July 2023.

The secondary market in Dubai was one of the best-performing segments in the months following the easing of COVID-19 restrictions.

The growth has been driven by huge demand from investors coming from markets overseas, including France, the United Kingdom, Italy and Russia.

During the first quarter of 2022 alone, sales of secondary properties dominated the deals, accounting for more than half (58%) of total sales transactions, according to Zoom Property Insights.

Off-plan properties

In a report on Tuesday, CBRE said that while sales transactions for secondary homes fell, off-plan properties saw a 58.7% growth.

Overall, Dubai’s property market continued to post substantial growth, with the total volume of transactions in the residential market reaching 11,328 in August alone, up by 22% compared to the previous year.

In the year to date to August 2023, the total volume of transactions reached 79,605, the highest on record over this period, registering a 41.7% increase from the previous year. Average prices in August also went up by 19.6% year-on-year, compared to 18.1% in July.

“This increase hides some softening of growth in the prime segment of the market, where we are still seeing pace of price growth slowing within a number of core and prime residential areas,” said Taimur Khan, Head of Research – MENA at CBRE in Dubai.

CBRE did not specify what has been behind the slowdown in the secondary market.

In its Q2 2023 report, Asteco also noted that the market overall continues to do better than its global peers.

“Over the past year, the Dubai real estate market has continued to significantly outperform many of its global peers. This is despite the UAE facing some global headwinds of rising interest rates and inflation,” the report said.