Dubai’s pre-sales real estate sector clearly appears to be dominating the property market after a quiet period in 2020, with pre-delivery sales recording an increase of over eight times in recent years and accounting for more than half of all transactions.
The emirate recorded pre-sale transactions worth 34 billion dirhams ($9.3 billion) in the second quarter of the year, up 750% on the 4 billion dirhams worth of transactions recorded in the same period in 2020.
This represents an increase of around 30 billion dirhams in transactions over three years, according to Dubai-based real estate developer Zazen Properties.
This growth was driven by affordable prices in the pre-sales segment and the higher return potential offered by properties under construction.
“Pre-sale real estate, especially under construction, is significantly more affordable compared to ready-to-go properties,” said Madhav Dhar, COO and founding member of Zazen Properties.
Falling demand
The pre-sales segment of the market performed poorly after the relaxation of COVID-19 restrictions in 2020, with most buyers preferring to purchase completed or secondary units.
In August this year, pre-sales reached their highest market share since the start of the pandemic. Pre-sales now account for 64.7% of the market, according to a separate Property Monitor report.
“Pre-sales had briefly held a dominant market share of this level in April 2020, when the COVID-19 pandemic had limited the ability to complete real estate transactions for completed properties due to mobility restrictions and the temporary closure of trustee offices,” says the report.
Total sales transaction volume increased by 8.1% month-on-month, reaching a total of 12,134 sales and marking the highest volume ever recorded for the month of August.
Since the beginning of the year, over 85,000 transactions have been recorded, representing an increase of 41.9% compared to August last year, and a 125% increase compared to 2021.
“Launches of new development projects and pre-sale property sales have been important drivers of the scale of transactional activity this year,” said Property Monitor.
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