In 2024, Dubai's real estate sector experienced a significant surge in off-plan property transactions, reflecting robust investor confidence and a dynamic market landscape. Off-plan sales accounted for approximately 63% of all property transactions, up from 54% in 2023, indicating a growing preference among investors for properties under development. 

Market Performance and Trends

The total value of off-plan property sales in 2024 reached AED 254.46 billion, contributing substantially to the overall real estate transaction value of AED 522.5 billion.

This surge is attributed to several factors:

1. Investor Incentives and Developer Strategies

Developers have increasingly leveraged flexible payment plans, fee waivers, and post-handover payment options to attract both local and international investors. These incentives have made off-plan properties more accessible, particularly for expatriate buyers looking to enter the market with lower upfront costs. Some key trends within this segment include:

• Extended Payment Plans: Many developers are now offering payment plans extending beyond handover, sometimes up to five to seven years, easing financial pressure on buyers.
• Discounts on Fees: Registration fees, which typically amount to 4% of the property price, are being waived or partially covered by developers to lower entry costs.
• Guaranteed Rental Returns: Some developers have introduced rental guarantee schemes, particularly in high-demand locations, ensuring investors a fixed income for a specified period post-completion.

These incentives have played a crucial role in stimulating demand, particularly among first-time buyers and foreign investors seeking to maximize their return on investment.

2. Limited Secondary Market Supply Driving Off-Plan Sales

The rising preference for off-plan properties is also driven by a shortage of ready-to-move-in properties in key areas. While demand for completed properties remains high, supply constraints have made off-plan investments a more viable alternative. Several factors contribute to this trend:

• Low Vacancy Rates in Established Communities: Areas such as Downtown Dubai, Dubai Marina, and Palm Jumeirah have seen vacancy rates drop below 5%, leading to increased competition for available units and driving buyers toward off-plan alternatives.
• Surging Rental Prices: With average apartment lease rates increasing by 17.3% and villa rents surging by 23%, many end-users are choosing to buy off-plan properties as a hedge against rising rental costs.
• Limited New Deliveries: While Dubai is ramping up construction, delays in project completions mean that less than 20,000 new units were delivered in the first half of 2024, further tightening the supply of ready properties.

These factors have led to heightened investor interest in off-plan properties, as buyers seek to secure units in desirable locations before completion.

3. High-Net-Worth Individual (HNWI) Influx and Luxury Market Growth

Dubai continues to attract a growing number of high-net-worth individuals (HNWIs), significantly influencing the luxury real estate segment. In 2024 alone, the emirate welcomed 6,700 millionaires, solidifying its position as a global wealth hub. This trend is driving demand for ultra-luxury properties and large-scale off-plan investments.

Key market dynamics linked to HNWI activity include:

• Preference for Branded Residences: Developers are increasingly launching branded residences in partnership with luxury brands such as Ritz-Carlton, Armani, and Lamborghini, catering to the elite buyer segment.
• Record-Breaking Sales in Prime Areas: Off-plan transactions in areas like Palm Jumeirah, Jumeirah Bay Island, and Dubai Hills Estate have set new price records, with multiple deals exceeding AED 100 million ($27 million).
• Shift in Buyer Profiles: The growing number of billionaire expatriates relocating to Dubai has created a new segment of buyers looking for multi-million-dollar investment properties, further fueling demand.

With continued HNWI migration and investor-friendly policies, the luxury off-plan sector is expected to maintain strong momentum.

Supply Considerations

In response to the heightened demand, developers launched over 200 residential projects, adding nearly 50,000 units to the off-plan market. Despite these efforts, concerns persist regarding the market’s ability to balance supply with escalating demand.

The influx of high-net-worth individuals has intensified competition for luxury properties, leading to a shortage in this segment. To address this, Dubai plans to complete nearly 9,000 villas by the end of the year and an additional 19,700 by 2025. 

Economic and Policy Factors

Dubai’s strategic initiatives, such as long-term visas and 100% foreign ownership in select sectors, have bolstered its appeal to international investors. The city’s economic resilience, coupled with a favorable tax environment, has further enhanced its attractiveness as a real estate investment destination. However, analysts caution that potential global economic slowdowns could impact investor confidence and demand, underscoring the importance of maintaining a balanced supply-demand dynamic to sustain market momentum.

Investor Implications

For investors, the current market conditions present both opportunities and challenges. The availability of flexible payment plans and the potential for capital appreciation make off-plan properties an attractive option. However, due diligence is essential to assess:

• The credibility of developers and their track record in delivering projects on time.
• Market demand for specific property types, ensuring alignment with investment goals.
• The potential impact of economic fluctuations on future property valuations.

Staying informed about economic indicators and policy changes will be crucial for making strategic investment decisions in Dubai’s evolving real estate landscape. Stay ahead of market trends—check out DXB Interact for more in-depth insights on Dubai's real estate sector.