Stock - Dubai skyline / Dubai property / property market / Dubai
Dubai property values are reaching the peak of this market cycle, which has been running from late 2020. It also means investors need to get realistic too. Image Credit: Bloomberg

When it comes to property investments in Dubai, the best way forward is to formulate realistic assumptions regarding the trajectory of the real estate market. To do so, it is essential to delve into the fundamental cycle that propels real estate prices.

What are the underlying principles that drive these price? While there exist any number of valid reasons behind the buoyant state of Dubai's real estate market, they all converge on certain pivotal triggers that fuel price increases.

This cycle commences with an intricate interplay between supply and demand, particularly for ready properties. These residential units serve as true indicators of the actual real estate market's pulse, as opposed to offplan sales. This is because offplan sales tend to diverge from demand for ready properties, because they are overly reliant on investor enthusiasm and market sentiment to propel them.

A good market run

Consequently, they cease to accurately represent the essential factors that drive the market. Nevertheless, it is vital for all investors - and landlords - to maintain a sense of realism. The rapid price escalation in Dubai property from late 2020 onwards - when the market was at its lowest point - cannot be expected to continue at the same pace indefinitely.

Therefore, it is prudent for sellers and landlords to identify the actual market value of their properties using the open data sources provided by Dubai Land Department. Depending on their willingness to sell or rent, as opposed to waiting for the ‘perfect’ time for a buyer or tenant, they should make informed decisions, even if it entails accepting offers slightly below their expectations.

While there is a noticeable upward trend in the number of transactions, as evidenced by 31,000 property sales transactions and a 23 per cent increase compared to Q3 2022, as well as a sales value of Dh98 billion in Q3-2023, investors must be cognizant that healthy trend, while indicative of market sustainability, does not imply an endless surge in property prices.

The substantial increase in supply, exemplified by the registration of 90 new projects in Q3-23, representing the highest ever for any third quarter in the past. With this surge in supply, demand may become diluted across numerous projects in the market, potentially slowing down the rate of price appreciation.

Unrealistic market dynamics must be avoided for the sake of long-term sustainability. In summary, the Dubai real estate market exhibits stability in terms of transaction volumes and property prices. However, no investment decision should be made without scrutinizing the stats at the unit level. The Dubai Land Department's provision of data is a valuable resource for all market stakeholder…