Dubai is one of the most dynamic and attractive real estate markets in the world. It offers a variety of properties for investors, from luxury villas to affordable apartments. But how did the market perform in Q4 of 2023? And what does it mean for you as an investor?
In this article, we will compare the key indicators of Dubai’s real estate market in Q3 and Q4 of 2023, such as the total volume of sales, the average price of properties, and prices per square foot. We will look at the reasons behind the changes and the implications for the future. By the end of this article, you will have a clear picture of how Dubai’s real estate market changed from Q3 to Q4 in 2023 and how you can benefit from it.
Total Volume of Sales
The total volume of sales is the sum of the prices of all the properties sold in a given period. It reflects the level of activity and demand in the market. A high total volume of sales indicates a strong and vibrant market, while a low total volume of sales indicates a weak and sluggish market.
In Q3 of 2023, Dubai’s real estate market witnessed a staggering total volume of sales of AED 108,003,865,982. This was the highest figure ever recorded in the history of the market, surpassing the previous record of AED 99,000,000,000 in Q4 of 2022. This shows that the market was booming and thriving in Q3, with a lot of buyers and sellers exchanging properties. A lot of this was fuelled by internal demand as well as foreign investment from Eastern Europe and Russia in the first 3 quarters of 2023.
However, in Q4 of 2023, the total volume of sales dropped to AED 94,502,670,280, a drop of 12.5% since Q3. This shows that the market cooled off slightly in Q4, with fewer buyers and sellers exchanging properties.
What could be the reasons for this decrease in Q4? There could be several factors, such as:
- Russians selling: Citing top Dubai brokers, Bloomberg says that Russians have now become net sellers of real estate, rather than net buyers, aiming either to repatriate the profits gained on the Dubai property market rally or to abandon mortgage deals they cannot afford due to the 30 percent decline in the ruble over the past 18 months.
Seasonal fluctuations: The last quarter of the year is usually a quieter time for the real estate market, as people tend to focus on holidays and festivities rather than buying or selling properties. This could explain why the market activity declined in Q4. - Market saturation: Due to the high volume of sales in Q3, this could have resulted in a saturation of the market, meaning that there were fewer properties available or desirable for buyers and sellers in Q4.
- Market correction: The high total volume of sales in Q3 could have also resulted in a correction of the market, meaning that the prices of properties adjusted to a more realistic and sustainable level in Q4. This could explain why the market supply declined in Q4.
Average Price of Properties
The average price of properties is the total volume of sales divided by the number of properties sold in a given period. It reflects the value and quality of the properties in the market. A high average price of properties indicates a high-end and premium market, while a low average price of properties indicates a low-end and budget market.
In Q3 of 2023, Dubai’s real estate market had an average price of properties of AED 2,513,295.93. This was a slight increase from the previous quarter, when the average price of properties was AED 2,500,000.00. This shows that the market value and quality remained stable and consistent in Q3, with a balanced mix of properties for different segments of buyers.
However, in Q4 of 2023, the average price of properties rose to AED 2,709,210.20. This was an increase of 7.8% from Q3. This shows that the market value and quality increased in Q4, with a higher proportion of properties for the upper segment of buyers.
There could be several factors to the rise in property prices, such as:
- Supply and demand: The lower total volume of sales in Q4 could have created a scarcity of properties in the market, especially for the high-end and premium segment. This could have driven up the prices of properties, as buyers competed for the limited supply of properties. This could explain why the market value and quality increased in Q4.
- Market segmentation: The higher average price of properties in Q4 could have also reflected a shift in the market segmentation, meaning that there were more buyers and sellers for the high-end and premium segment than for the low-end and budget segment.
Price per Square Foot
The price per square foot is the average price of properties divided by the average size of properties in a given period. It reflects the efficiency and profitability of the properties in the market on a more granular level. A high price per square foot indicates a more efficient and profitable market, while a low price per square foot indicates a less efficient and profitable market.
In Q4 of 2023, the price per square foot dropped to AED 1,504.12 which was a decrease of 2.7% from Q3. This shows that the market efficiency and profitability decreased slightly in Q4, with a lower ratio of price to size for the properties.
What could be the reasons for this decrease in Q4? There could be several factors, such as:
- Market competition: The higher average price of properties in Q4 could have created a more competitive market, especially for the high-end and premium segment. This could have driven down the price per square foot, as sellers offered more incentives and discounts to attract buyers.
- Market preference: The lower price per square foot in Q4 could have also reflected a change in market preferences, meaning that there were more buyers and sellers for the larger and more spacious properties than for the smaller and more compact properties. This could have lowered the price per square foot, as the larger and more spacious properties typically have lower prices per square foot than the smaller and more compact properties.
- Amenities: The lower price per square foot in Q4 could have also reflected an innovation of the market, meaning that there were more features and amenities in the properties, such as pools, gyms, sporting facilities, etc. This could have lowered the price per square foot, as these features and amenities typically add to the size of the properties but not to the price of the properties.
FAQs
Here are some frequently asked questions and answers related to the topic of the article:
Q: What are the benefits of investing in Dubai’s real estate market?
A: Some of the benefits of investing in Dubai’s real estate market are: the high returns and capital appreciation, tax-free income, diverse and attractive portfolio of properties, strong and stable economy, strategic location and connectivity, world-class infrastructure and amenities, multicultural and cosmopolitan lifestyle, and the favorable laws and regulations for foreign investors.
Q: How can I find the best properties and deals in Dubai’s real estate market?
A: The best way to find the best properties and deals in Dubai’s real estate market is to do your research and due diligence. You can use platforms like Viewit, to look at immersive video listings of each property, giving you the first viewing experience! Additionally, you need to study the market trends and data, compare the different types and categories of properties, analyze the pros and cons of each property, and evaluate the price and value of each property which can be done using Viewit AI.
Q: How can I finance my investment in Dubai’s real estate market?
A: There are different ways to finance your investment in Dubai’s real estate market, such as cash, mortgage, or installment payments via the developer for off plan properties. Cash is the simplest and most straightforward way, as you pay the full amount of the property upfront, and avoid any interest or fees. Mortgage is the most common and popular way, as you borrow money from a bank or a lender, and pay it back over a period of time, with interest and fees. Installment is the most flexible and convenient way, as you pay a portion of the property upfront, and pay the rest in monthly or quarterly installments, directly to the developer or the seller without any interest or fees.
Q: How can I manage and maintain my investment in Dubai’s real estate market?
A: There are different ways to manage and maintain your investment in Dubai’s real estate market, such as self-management, property management, or rental management. Self-management is the most cost-effective and hands-on way, as you take care of everything yourself, from finding tenants, collecting rent, handling repairs, to paying bills. Property management is the most hassle-free and professional way, as you hire a company or an individual to take care of everything for you, for a management fee or a commission. Rental management is the most profitable and passive way, as you join a program or a platform that rents out your property for you, for a share of the income.
Conclusion
In summary, Dubai’s real estate market changed from Q3 to Q4 in 2023 in the following ways:
- The total volume of sales decreased by 12.5%, indicating a slight slowdown in the market activity
- The average price of properties increased by 7.8%, indicating a rise in the market value and quality
- The price per square foot decreased by 2.7%, indicating a decrease in the market efficiency and profitability
These changes provide valuable insights for investors who are interested in Dubai’s real estate market. They show that the market is dynamic and diverse, offering different opportunities and challenges for different segments of buyers and sellers. They also show that the market is influenced by various factors, such as foreign investments, seasonal fluctuations, market saturation, market correction, market competition, market segmentation, market diversification and market innovation.
Therefore, investors need to be aware of these trends and factors, and adapt their strategies accordingly. They need to monitor the market closely, and look for the best deals and the best times to buy or sell properties. They also need to consider their goals and preferences, and choose the properties that suit their needs and expectations. Luckily, you can always check Viewit’s blogs for up to date information about Dubai real estate tips and trends!