Dubai’s off-plan property sector is clearly dominating the real estate market after a quiet 2020, with pre-handover sales recording a more than eight-fold increase over the last few years and accounting for over half of the transactions.

The emirate logged off-plan transactions worth AED34 billion ($9.3 billion) during the second quarter of the year, up by 750% from the AED 4 billion deals registered in the same period in 2020.

That’s an increase of around AED30 billion in transactions over the course of three years, according to Dubai-based developer Zazen Properties

The growth has been driven by affordable prices in the off-plan segment and the potential higher return on investment (ROI) that properties under construction offer.

“Off-plan real estate, especially when under construction, is significantly more affordable when compared to ready properties, said Madhav Dhar, COO and founding member of Zazen Properties.

Low demand

The off-plan segment of the market had a lacklustre performance after COVID-19 restrictions eased in 2020, with most buyers opting to buy completed or secondary units back then.

As of August this year, off-plan sales reached the highest market share since the beginning of the pandemic. Off-plan sales now represent 64.7% of the market, according to a separate report by Property Monitor.

“Off-plan sales last held a dominant market share of this level only briefly in April 2020 when the COVID-19 pandemic limited the ability to transact completed properties due to mobility restrictions and the temporary closure of Trustee offices,” the report said.

The total volume of sales transactions went up by 8.1% month-on-month, reaching a total of 12,134 sales and marked the highest volume ever for the month of August.

Year-to-date, there have been more than 85,000 deals recorded, a 41.9% increase over August last year and a 125% increase of that for 2021.

“New development project launches, and the sale of off-plan properties have been significant drivers for the amplitude of transaction activity this year,” Property Monitor said.

(Reporting by Cleofe Maceda; editing by Seban Scaria)