Expert Reports Decline in Dubai Secondary Market Home Sales in Q2

Dubai Real Estate Market Trends: A Shift in Dynamics

Dubai’s real estate market has witnessed remarkable growth in recent years, but subtle shifts are now emerging, reflecting a recalibration towards more sustainable norms. According to Lynnette Sacchetto, founder of Dubai-based real estate solutions provider RealTrust, the market is showing signs of aligning with typical demand patterns rather than the extraordinary post-COVID spikes in activity.

Adapting to Market Norms

While the market continues to see month-on-month growth, the pace is starting to moderate—a trend likely to persist into next year. Sacchetto attributes this slowdown to a number of underlying factors, including an influx of new property supply and sellers adjusting their expectations as they recognize that properties no longer command the high premiums of recent years. Driven by a tight supply and high demand, these inflated values are now normalizing.

Market Indicators

Sacchetto explains that while sales transaction data is central to market analysis, it doesn’t always capture real-time trends due to the length of the transaction process, often taking three to four months. To gain a more accurate picture, it’s essential to review other data sources like listings, supply, demand, mortgages, and off-plan developer data, she says.

Since September 2023, for instance, UAE real estate data platform Reidin has reported a steady month-on-month decline in median residential listing prices, averaging a 5% drop. This shift indicates the market’s gradual transition from a seller’s market to a buyer’s market. Additionally, average days on market for residential sale listings have increased significantly, from 30 days last year to over 90 days in Q2 2024, reflecting a more stagnant market.

Secondary Market and Off-Plan Transactions

According to Dubai Land Department data, Q2 saw a 2.9% decrease in secondary market residential transactions, marking the second consecutive quarterly decline. Nonetheless, overall Q2 sales transactions reached 40,936, totaling AED 118 billion ($32.2 billion)—a 10% increase quarter-on-quarter and a 36% year-on-year rise, driven largely by the off-plan segment.

Of these transactions, 65% (26,642) were off-plan properties, while 35% (14,294) were in the secondary market. With an expanding off-plan market, new property launches and completions are expected to shape Dubai’s real estate landscape in the coming years.

Impact of Growing Supply

Dubai’s ongoing surge in off-plan developments is reshaping market dynamics. In 2023, 107,145 new units were launched, with an additional 78,361 units already introduced in 2024. This growth is reflected in off-plan transaction data, which recorded an 18% quarter-on-quarter and a 64% year-on-year increase.

Despite this volume, the median sales price for off-plan properties in Q2 was AED 1.54 million, showing a slight 0.6% decrease from Q1, marking the second consecutive quarterly dip. Additionally, sellers of off-plan units are often challenged to sell at their original purchase price or below to avoid upcoming developer payments, leading some to sell at a loss rather than the premiums expected at the market’s peak in 2022-2023.

As more off-plan projects progress through the pipeline, Sacchetto anticipates these trends will continue, bringing new opportunities for buyers while prompting sellers to adjust to a more balanced market.