Dubai’s real estate market is currently experiencing a significant rise in land and plot prices, largely fueled by the booming off-plan sales sector. This surge is creating new investment opportunities, but investors need to stay vigilant to take full advantage of the market dynamics.
The off-plan segment now represents about 55% of all real estate transactions in Dubai. Over the past few years, it has seen steady growth and shows no signs of slowing down. In the first nine months of this year alone, off-plan sales reached an impressive Dh179.3 billion, reflecting a 42% increase compared to the same period in 2023. Additionally, the number of off-plan transactions soared by 44%, totaling 63,700 transactions, while the average price per square foot climbed by 15%, reaching Dh1,600.
This expansion in the off-plan market has prompted developers to seek new land opportunities, which, in turn, has driven land prices up. Firas Al Msaddi, CEO of fäm Properties, explains that land in certain areas remains relatively affordable until developers begin to show interest. Once these locations gain traction, prices rise sharply due to increased demand. As long as developers can purchase land at rates that allow them to profit from off-plan projects, the upward trend in land prices is expected to continue.
Compared to five years ago, the availability of land in Dubai has significantly decreased, especially in high-demand areas like Business Bay. Msaddi notes that just a few years ago, there were 100 plots available for sale in this prime location; today, only nine plots are on the market, with prices doubling or even tripling since the pre-Covid period. The situation is even more challenging for larger plots suitable for master community developments, as private developers find it increasingly difficult to secure the necessary land.
The surge in land prices is not limited to plots for buildings and towers; plots for villas and townhouses are also experiencing significant appreciation. Both individual buyers and companies have recognized the profitable margins available in purchasing land, developing villas or townhouses, and then selling them. For example, in Jebel Ali Hills, land that previously sold for Dh70 to Dh80 per square foot before the pandemic is now fetching Dh250 to Dh300 per square foot.
As the off-plan market continues to expand rapidly, land prices are likely to rise even further. Projections for 2024 indicate that it could set an all-time high for new project launches in a single year. This surge in new developments could further stimulate the market, making this a critical year for real estate investors. However, it’s essential for them to approach the market cautiously and keep a close eye on developments, especially as the off-plan segment reaches unprecedented levels of activity.
Investing in Dubai’s real estate can be highly rewarding, but success relies on making informed decisions. Here are three key strategies, according to Msaddi, to help protect your investment:
Consult a Trusted Real Estate Expert: Find a real estate professional you feel comfortable with, who understands your goals. Their guidance will be invaluable in identifying opportunities that align with your investment objectives.
Conduct Personal Inspections: Always inspect any property you consider purchasing, whether it’s completed or still under construction. This firsthand evaluation will help you assess the property’s condition, the surrounding infrastructure, and its potential for future growth.
Leverage Reliable Market Intelligence: Obtain your market insights from trustworthy sources, using up-to-date data from the Dubai Land Department. This ensures you make confident, well-informed decisions in a dynamic market.
By staying informed and strategic, investors can navigate the thriving Dubai real estate market successfully.
