Dubai’s property market slowed down towards the end of 2023, with off-plan sales tumbling by nearly 70% in December, consultancy firm CBRE said in a report released on Tuesday.

The residential market recorded a total of 6,216 deals during the month, down by 30.3% from the prior year. The softening was driven by a 69.7% drop in off-plan sales, although sales of secondary homes rose by 35.3%.

The market also saw a slowdown in the uptake of luxury homes, particularly those that cost more than AED 5 million ($1.3 million) during 2023, with the number of deals in the prime segment totalling 1,968, down by 15.5% from the previous year.

The number of transactions within the super-prime segment, which includes properties costing more than AED 10 million, also dropped by 3.1% to reach a total of 1,003.

Prime and super-prime segments include properties in Downtown Dubai, Emirates Hills, Jumeirah Bay Island, Palm Jumeirah and District One.

In the rental market, demand remained relatively elevated, but CBRE said it saw further moderation.

“The rate of rental growth has softened throughout the year, where in the year to December 2023, average residential rents in Dubai increased by 18.9%, down from the 19.2% growth registered in November 2023.”

Overall performance

Despite the marked decline in off-plan real estate transactions in December, and the slow uptake of premium properties during the year, Dubai’s property market still managed to deliver a strong performance for the entire 2023.

The total volume of deals recorded during the year reached a record 118,993 transactions, surpassing the total deals in 2022 by nearly 30%.

Total off-plan transactions during the year also increased by 31.9% and secondary market deals rose by 26.3%.

CBRE did not say whether the softening in the prime and super-prime segments and the recent decline in off-plan sales will continue this year, but it said that rental growth will continue to moderate in the year ahead.

“We expect that rental growth will continue to moderate, however, still remain positive in 2024,” said Taimur Khan, Head of Research at CBRE.

(Writing by Cleofe Maceda; editing by Seban Scaria)