As property prices in Dubai’s central districts reach record highs, many buyers are being pushed out of prime locations and are now turning to more affordable suburban areas. The surge in property prices, coupled with aggressive off-plan payment plans offered by developers, is reshaping the city’s real estate market.
During the Covid-19 pandemic, demand from high-net-worth individuals (HNWIs) and millionaires relocating to Dubai drove significant price increases in key locations such as Downtown, Business Bay, Palm Jumeirah, Marina, Sheikh Zayed Road, and Dubai Hills Estate. Prices in these hot spots have been growing at single to double-digit rates on a quarterly basis. As a result, more buyers and investors are looking beyond these central areas, fueling a rise in prices in the suburbs.
According to Prathyusha Gurrapu, Head of Research and Consultancy at Cushman & Wakefield Core, property prices across Dubai maintained an upward trajectory in the third quarter of 2024, marking the 17th consecutive quarter of growth. Citywide sales prices rose by 20% year-on-year, with villa prices jumping 23% and apartment prices increasing by 19%.
However, it is the suburban and affordable communities that are seeing the most substantial price growth. Discovery Gardens recorded a 43% price increase, followed by Jumeirah Lakes Towers and Dubailand (Remraam) at 34% and 28%, respectively. Central districts such as City Walk and Dubai Hills Estate saw more moderate price rises of 12%. Gurrapu noted that this trend is driven by the relatively lower price points in these areas, which are becoming increasingly attractive as buyers are priced out of central districts.
The demand for off-plan properties continues to rise, as international investors are seeking more economical options in Dubai compared to global cities like London, New York, Hong Kong, and Paris. In response, some developers have introduced aggressive payment plans to cater to this demand. These plans, often structured at 80/20 or 75/25, allow buyers to pay a small portion upfront and the remainder upon completion, making it easier to purchase properties without immediate financial strain.
However, this shift towards aggressive payment plans is also making homeownership more difficult for lower-income individuals and families, particularly those seeking larger homes. With rising construction costs and challenges in securing good contractors, developers are increasingly relying on these plans to ensure timely project completion.
Despite these challenges, off-plan sales activity remains robust. Developments in desirable locations from well-known developers often sell out within days or hours, driven by a combination of factors such as brand reputation, competitive pricing, and attractive payment structures. As the market continues to evolve, more buyers are looking to suburban areas for value-driven investment opportunities, as central districts become increasingly out of reach.
