The report found that Q3 2023 was the best performing Q3 since 2014, in terms of both volume and value of real estate transactions. Growing confidence in the Dubai real estate market was identified as a factor behind this, which the report attributed to economic stability, government initiatives, robust infrastructure, quality of life, and the UAE remaining a tax-friendly jurisdiction.
Market accessibility was also identified as a factor behind this success, with the report highlighting an increasingly diverse demographic of property investor. 26% of total sales in Q3 2023 were in the price range of AED 1m to AED 2m, which, the report contended, aligned with the on-going trend of apartment sales outperforming villa sales. Many of these transactions involved first-time or one-time property investors. The report put this down to residents and overseas buyers becoming increasingly aware of investment opportunities in the UAE, including the short-let market.
The AirDXB report also discussed the shift towards Al Khail Road – a new dominating market. It contended that traditionally popular areas such as Downtown Dubai and Palm Jumeirah no longer dominate real estate transactions due to the high-end investor market settling and the mid-level investor market spurring activity.
The report highlighted that buyers are seeking value and deals that can be found in lower-cost areas such as JVC, Business Bay and JLT, and also noted the emergence of new and upcoming areas such as Al Merkadh (off-plan) and Arjan. The report considered this to be beneficial to those looking to short let their property in these areas, as the lower sale price could provide a greater yield on financial returns.
AirDXB also discussed the impact of the UAE Tourism Strategy 2031 on the short-let market. Launched in November 2022, the proposed strategy aims to strengthen the position of the UAE in a tourism context, with the goals of boosting overnight visitors to 40 million by 2031 and attracting AED 100bn in additional tourism-related investments, potentially including commercial gaming (the establishment of The General Commercial Gaming Regulatory Authority (GCGRA) was announced in Q3), which would bring a new type of tourist to the Emirates. Because the long-term and short-let markets target residents and tourists respectively, the report predicts that the percentage difference in comparable financial returns will increase by up to 80% in favour of short-let.
Record-breaking rates on short lets were also identified as a Q3 2023 trend. AirDXB’s report considered Q3 as the low season for short lets, meaning that ADRs often fall below the annual average. However, Q3 was also identified as the time that provides indication of how high season (starting in Q4) will perform as guests start to book for future months.
Long-term rental market cooling was also considered a Q3 2023 trend. Long-term rents were reported to be levelling off in traditionally popular areas as renters, just like buyers, began to move further out to secure better deals.
The Dubai Land Department stated that the average rent in Q3 was AED 68,000. But the report asserted that there were areas where this was significantly higher, such as Palm Jumeirah, where the average rent was AED 256,785.
A report by CBRE released in August 2023 stated that areas such as Mudon (5%), Deira (4.8%) and Remraan (4.6%) were seeing the highest percentage increase in rent on a month on month basis (figures from July 2023), which the report said showed that the high spikes in rental returns for landlords, in central locations, had cooled.
