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While the luxury real estate sector in Dubai remains prosperous, there is a notable emergence and rapid expansion of the mid-market segment, indicating its increasing importance.
Dubai’s real estate market has traditionally been synonymous with luxury living, but there's a noticeable shift taking place. The mid-market sector is emerging as the fastest-growing and most sought-after segment, potentially posing a challenge to the dominance of the luxury market.
Anna Skigin, CEO of Frank Porter, noted in an exclusive interview with Arabian Business, "Dubai’s property market historically catered to high-end residences for the wealthy, but now, there's a surge in more affordable options for the average professional."
John Lyons, Managing Director of ESPACE, contended that the mid-market doesn't necessarily have to compete directly with the luxury market. "It has always been the more sought-after market, despite receiving less media attention," he emphasized.
Nonetheless, he affirmed that the mid-market segment "has consistently been and will remain the fastest-growing and most sought-after sector in Dubai’s real estate market."
According to a recent analysis by Knight Frank, luxury home sales in Dubai during the first quarter of 2024 exceeded $1.7 billion, marking a 6 percent increase from the same period in 2023.
Gul Tabba, Developer at Lucky Aeon Real Estate Development, attributes this surge to a positive outlook for the city’s real estate sector. He highlights that high-end properties, ranging from branded residences to sea-side mansions, have primarily attracted investors from the United Kingdom, Russia, and China, enticed by Dubai's appealing lifestyle and advantageous tax policies.
However, Tabba observes a recent market shift, stating, "The era of luxury dominating Dubai’s property market is waning, with buyers now prioritizing value and refusing to compromise on quality. This shift has ushered in the flourishing mid-market segment."
Earlier this year, Arabian Business reported on the need for more mid-market properties in Dubai to accommodate a broader range of investors as the country progresses towards a growing population, aligned with Dubai’s Urban Master Plan 2040.
Dubai 2040 Urban Master Plan projects to reach a population of 7.8 million by that year
Despite the UAE's substantial allocation of over $356 billion to private real estate developments and ongoing public building and housing programs, there is still predicted demand for more real estate projects.
John Lyons commented on Dubai's Urban Master Plan for 2040, which anticipates a population of 7.8 million by that year. He emphasized that as the city's demographics continue to expand and diversify, demand will follow suit, necessitating developers to introduce new projects to accommodate a broader range of budgets.
Lyons stressed the importance of affordability, citing historical data showing that over 60 percent of purchases fall below AED3 million. He highlighted the significance of introducing high-quality mid-market developments to meet this demand.
According to Deloitte's latest Middle East Market Predictions Report for 2024, the residential market has maintained an upward trajectory, with unprecedented transaction levels in 2023. Sales prices and rents have seen significant year-on-year increases of 18 percent and 26 percent respectively.
Top areas for sales price growth
The data indicates that the secondary market constituted over 41 percent of transactions last year, with areas like Business Bay, Downtown Dubai, and Jumeirah Village Circle (JVC) recording the highest activity.
The report confirms that the Dubai property market remains largely driven by "cash buyers," particularly in the affordable villas and townhouses segment.
Anna Skigin pointed out the global growth of the middle class, with over 110 million individuals expected to join its ranks this year, as per Visual Capitalist's research. She emphasized the need for places to live as Dubai continues to enhance both its business and tourism sectors, advocating for the mid-market.
John Lyons provided context, noting that in the residential market, the number of properties sold in the 2 to 5 million price range was 500 percent higher than those sold in the over 10 million price range in the first quarter of this year.
Furthermore, experts affirm that the mid-market segment offers opportunities for investors seeking attractive rental yields.
Source: arabianbusiness
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