Several records were set in Dubai’s real estate market in 2023, and the future definitely looks promising. Given that, it is hardly surprising that foreign investors show a lot of interest in the city. However, the location should be carefully selected to make the most of your investment. Experts highlight several Dubai districts that offer the highest return on investment for those who want to buy real estate to rent it out or later resell it in 2024.
2023 Market Statistics
According to Betterhomes, the number of real estate transactions in Dubai’s market reached a record level of 120,742 in 2023, which is 38% higher than in 2022. More than half of transactions were completed to acquire a facility under construction.
In September 2023, the average price per square meter exceeded the previous peak level set in September 2014. The upward trend continued during the last quarter of the year despite the decreasing number of construction-in-progress transactions.
The consulting company Bayut shared similar data: according to its estimates, 132,628 real estate sale transactions were completed in 2023 for the total amount of 409.8 billion dirhams ($112 billion), including residential and commercial premises. The data provided by Bayut also mark a considerable increase in apartment and villa prices in Dubai’s prestigious districts: in 2023, they grew from 4% to 21% depending on the location.
According to Betterhomes, the cost of real estate went up by 18% on average across the emirate in line with the growing demand. In some districts, including Dubai Creek Harbor and Palm Jumeirah, the indicator rose by more than 30%. Average prices in Dubai now exceed the peak figures we could observe before the 2014 crisis.
The sector of elite real estate in Dubai was thriving, too. Market research showed that the number of purchased facilities that cost over 15 million dirhams has increased more than twice as compared to 2022.
The segment of rented housing showed an increased demand with supply lagging behind. As a result, average prices rose by 24% according to Betterhomes. Challenging market conditions contributed to the total occupancy rate of rented housing soaring to an unprecedented 93–97%.
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Top 3 Most Active Foreign Investors
Despite the higher cost per square meter, the interest of buyers does not wane, especially if we are talking about foreigners. According to Betterhomes, the Indians were the most active foreign investors in Dubai’s real estate in 2023. The second place was taken by the British, while the Russians ranked third. The next places were taken by Egypt, Lebanon, Italy, Pakistan, France, and Turkey.
Foreigners considerably increased investments in Dubai’s real estate market in 2023 as they often bought local villas and apartments as assets and as a shelter. Many foreigners used transactions as a reason to obtain a UAE Investor Resident Visa.
There was also a considerable inflow of UHNWIs from abroad that generated an unprecedented demand for premium class villas. It resulted in a record-breaking price growth for the assets similar to those you can see by clicking on the links below:
- Deluxe Villas in a New Dubai Complex Sold in Installments for 3 years
- Five-bedroom Villa in DAMAC Lagoons Dubai at the Lowest Developer’s Price
- Cavalli Estates in Damac Hills – Roberto Cavalli Designed Luxury Villas in Dubai
- Three-Bedroom Villa in the Golf Town Complex in the elite DAMAC Hills District in Dubai
- Luxury Estate in Dubai – Aristocratic Villa in TRUMP VILLAS Complex with Permanent Residence for 10 Years
The conclusions made by Betterhomes are confirmed by an annual study published by an Indian subsidiary of Sotheby’s International Realty. It shows that Dubai has become the most demanded destination among Indian investors that choose a foreign real estate market followed by the USA.
Both teams of analysts contend that Dubai’s real estate market continues to attract the attention of the whole world by offering investors safety, excellent living standards, low taxes, administrative efficiency, a favorable business environment, an attractive return on investment, and immigration benefits for foreigners.
The fact that the buyers from Russia, Egypt, Lebanon, Pakistan, and Turkey are becoming more and more interested in this market proves that Dubai preserves its role as a global shelter in the periods of economic and geopolitical instability.
Which Districts Offer a Higher Return on Investment?
Dubai also attracts foreign investors by the possibility to receive a high income from rent and considerably increase their capital when they finally decide to sell the real estate they bought. In 2023, foreigners invested millions of dirhams into the local real estate market. But which districts offer the highest return on investment to investors from abroad?
Bayut experts presented a report on Dubai’s real estate market that sheds light on the emirate’s most popular districts. The authors of the report determined the locations with the highest return on investment last year based on the profitability from rent and capital increase. The experts also took into account the buyers’ interest when they ranked locations. Here are the main conclusions provided in the report:
Liquid Lots for Resale: Price Fluctuations
If we look at the segment of affordable real estate, potential investors and real estate buyers showed an increased interest in the following locations in 2023:
- International City Dubai
- Dubai Residence Complex
- DAMAC Hills 2
- Dubailand
Investors in real estate with an average budget preferred 4 districts:
- Jumeirah Village Circle
- Dubai Silicon Oasis
- Al Furjan
- Springs
Investors in elite real estate gave preference to the following locations:
- Dubai Marina
- Business Bay
- Arabian Ranches
- Dubai Hills Estates
If we are talking about inexpensive apartments, the sales prices in popular districts increased by 5–50%. The average price of affordable villas decreased by 10–26%. The only exception is DAMAC Hills 2 which shows a minor increase (+ 0.54%).
In the average-priced segment, the cost of apartments rose by 3% – except for Jumeirah Lake Towers where the average sale price went down by 0.77%. The price of average-priced villas in popular districts went up by 15–21%.
In the sector of elite real estate, the majority of districts showed a stable price growth by 3–17%. Considering these facts, potential buyers of apartments in Dubai should pay attention to premium lots from the selection:
- Cavalli Tower by DAMAC in Dubai Marina: Deluxe Apartments in the UAE;
- Lucrative Investment and Legal Residence in the UAE: Purchase a Luxurious Apartment in DAMAC Towers by Paramount, Dubai
- Golf Gate Apartments in Damac Hills, Dubai for Permanent Residence.
Real Estate to Rent Out: Return on Investment
If we study the return on investment based on the predicted profits from renting out the property you have bought, the following districts in Dubai turned out to be the most interesting options for potential investors as they offer a profit rate of 11%:
- Dubai Investments Park
- Liwan
- Discovery Gardens
Here are the most attractive options for those who buy average-priced apartments that offer a profit rate of 9% from rentals:
- Dubai Silicon Oasis
- Dubai Sports City
- Motor City
Finally, take a look at the leaders in the segment of luxury apartments with a profit rate of up to 10%:
- Al Sufouh
- Green Community
- Jumeirah Golf Estates
The return on investment in cottage settlements is in no way lower. The villas and townhouses rented out in Al Rashidiya will give you an average return on investment exceeding 9%, which makes them appealing to potential investors.
In the same way, International City and Jebel Ali districts offer more than 8%. Average-priced villas in Jumeirah Village Circle and Reem districts showed a predicted return on investments ranging between 6% and 8%.
The Al Barari district stands out among the areas where you can buy luxury villas with the return on investment exceeding 8%. Are you ready to invest in one of these locations? You will need a personal account with a bank in Dubai that you can open remotely.
2024 Forecasts: Is Dubai Real Estate Worth Buying?
Dubai’s real estate sector finished the year 2023 on a high note. Experts say that the upward price trend is likely to continue, which will create favorable conditions for sellers and lessors. The emirate’s attractiveness as a global financial center and a popular destination for business and life will greatly contribute to the booming real estate sector.
Market analysts also note that the new supply in the real estate market that the emirate is craving for will become available in sufficient quantities as late as the end of 2025 or even later. It makes it possible to assume that the price boom in Dubai will continue into the years to come.
In particular, according to forecasts by Realiste, Dubai’s real estate market will set new records in 2024. The turnover will increase by 17%, while the number of transactions will rise by 20% as compared to previous year. As the number of transactions and the market turnover will continue to rise quickly, experts predict that the average price per square meter of living space in Dubai will rise by at least 4% in 2024.
