(MENAFN- Khaleej Times) In signs of upcoming trends, demand for apartments is picking up in Dubai on the back of more and more professionals moving to the emirate in search of greener pastures.
This is in contrast to the times of Covid-19 pandemic outbreak when the sale of villas and townhouses had spiked, with people looking for bigger spaces amid restrictions on travel and outdoor activities.
As reported by Khaleej Times earlier, due to constant growth in population, demand for apartments in Dubai has been outpacing supply for some time now.
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In 2023, when Dubai's population rose by nearly 100,000 in 2023, around 50,000 residential units had hit the market. Likewise, the emirate welcomed 25,700 new residents in the first quarter of 2024 as against the 6,500 new units entering the market.
According to data, in April, nearly 58 per cent of property buyers were looking for an apartment, while 42 per cent searched for villas/townhouses. On the other hand, 79 per cent of tenants sought apartments, while 21 per cent looked for villas/townhouses – in a clear revelation of a rise in the demand for apartments in contrast to previous months where villas picked up more interest.
“The strength of the real estate market is evident despite ongoing changes in demand. (There) is an interesting shift in consumer preferences, towards an increased appetite of potential home-owners for apartments. This contradicts the demand for villas that we have been seeing since the pandemic, especially over the past months. We expect the market will remain dynamic following announcements such as the shift of operations from Dubai International Airport to Al Maktoum International Airport, sparking renewed demand across developing areas,” said Cherif Sleiman, chief revenue officer at Property Finder.
“With the population continuing to grow and many people setting up homes in the region, we have seen significant increase in mortgage leads and buyer registrations over the last quarter,” said John Lyons, managing director, Espace Real Estate.
A Property Founder study revealed that around 64 per cent of tenants looked for apartments, preferring furnished properties with ready interiors, while 33 per cent searched for unfurnished options. In contrast, those who were seeking villa/townhouse rentals had different preferences, with about 55 per cent scrolling through unfurnished units and 44 per cent for furnished options.
Going by the forecast for population growth of professionals and market supply, this trend of demand of more people looking for apartments is expected to continue in the foreseeable future, hence, pushing demand, rentals and prices for apartments on the upward trend.
Renewed demand in developing areas
Industry executives say there will be higher demand for apartments and villas in Dubai South and on either side of Sheikh Mohamed bin Zayed Road and Emirates Road in the coming years, mainly due to Dubai Metro's Blue Line and the shifting of operations from Dubai International Airport to Al Maktoum International Airport.
Most of the demand will be for the off-plan units in these new areas such as Dubai South, JVC, Marjan, Dubailand, Damac Hills, International City, Silicon Oasis and other communities located on key arteries leading towards Al Maktoum International Airport because off-plan units will be higher returns for investors as population will increase in those areas due to development of airport, new residential and hospitality projects.
Property Finder said promising good returns on investments, off-plan transactions continued to grow with a year-on-year increase of roughly 86.51 per cent in volume, with 7,203 transactions in total and a surge of 77.09 per cent YoY in value, reaching around Dh13.9 billion as compared to Dh7.8 billion in April 2023.
“It is promising to see the continued spike in interest in off-plan options, given the diversity of choice, the robust pipeline in place and the potential high return on investment. Recent regulatory changes including the need for a primary unit permit to be secured in order to advertise such properties, aim to further positively impact the quality of supply available,” said Sleiman.
John Lyons said tenants have been increasingly become homeowners over the last 12 months due to very high rental prices and a more affordable mortgage market.“When people are faced with the decision whether to renew their contract, they are looking at the exorbitant cost of rent versus the cost of ownership. Mortgage products are much lower than they once were and there are also relaxed visa regulations making it easier for people to buy their own home,” he added.
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