The Dubai real estate market continues to exhibit exceptional performance, outperforming global cities despite global market difficulties and the usual festive season slowdown on the market during the fourth quarter. Real estate sales increased by 15% quarterly and by 65% annually as investor confidence in the city remains robust.

Dubai's real estate market closed the year with a total of 97,252 transactions valued at AED 265 billion, 59.5% higher than in 2021.

The fourth quarter of 2022 witnessed a 2% quarterly increase in mortgage activity despite rising interest rates.

Strong demand for apartments was witnessed during the quarter, following a surge in sales of villa townhouses; apartment sales accounted for 69% of total transactions during the quarter; the transactional price per square foot registered a 6% increase quarter on quarter and is now 18% higher than the same quarter last year.

This increase in apartment sales was fueled by a spike in new off-plan launches, with initial sales accounting for 58.5% of total apartment sales.

Primary market transactions increased by 25% quarter-on-quarter and by 89% year-on-year, with primary market transactions accounting for 49% of total sales during the quarter. Secondary market performance, on the other hand, was solid, with a 5% increase QoQ and a 45% increase over the same quarter last year. A sizeable portion of secondary market sales were resales of off-plan properties, with most initial owners cashing out on premiums. The resale volume of off-plan properties should be carefully observed in future quarters, particularly in non-prime locations.

With a wave of high-net-worth individuals flocking to the city, the luxury real estate market is expanding. The volume of transactions surged by 28% quarter-on-quarter and 164% year-on-year.

When compared to 2021, annual transactions in the luxury segment climbed by 116% for residential properties sold above the AED 10 million threshold and by 79% for properties sold above the $10 million threshold.

It is noteworthy that there has been a significant increase in the sales of apartments above the $10 million mark, with a YoY growth of 313% when compared to the previous year. This trend can be attributed to the launch of high-end apartment developments by Dubai-based developers, with a majority of these properties falling under the category of branded residences. This indicates a strong demand for this type of product among buyers.

Palm Jumeirah surpassed other communities in Dubai in terms of the value of homes sold in the quarter, leading to a record-breaking year for the community in terms of both volume and value of properties sold in a year.

During the quarter, a 600 million AED villa with a plot on Palm Jumeirah's frond N was sold, shattering the record for the most expensive property sold in Dubai for the third time this year. The performance of commercial real estate remains sluggish, falling 16% from the previous quarter but remaining 5% higher than the same quarter last year; greater performance is projected for the sector in the following quarters. The primary market (off-plan) returned to dominance in 2022 with no signs of a supply slowdown in sight, while 56,000 units were launched during the year it’s still 32% lower than the number of units added during the industry's peak in 2014.

While we remain positive about the stability of the Dubai market and foresee continued expansion, developers and investors will need to carry the lessons of previous market cycles in mind. The current expansion of the market cannot continue forever. Large gains are likely over for the foreseeable future, and several months of price stability with small price increases are predicted.