Developers race to secure more land in Dubai

September 5, 2024, 10:46 AM

Construction work in Dubai Marina. With central locations filling up, developers are having to look for plots away from the city’s core

Sales treble from January to August
Off-plan transactions increase
‘Every developer is buying’

Land sales in Dubai have been on a steep incline since the start of the year, signalling more development activity to come.

According to figures shared with AGBI by real estate brokerage fäm Properties, 1,396 plots changed hands in August, for a total value of AED15 billion ($4 billion). In January, 473 plots were sold for a combined price of around AED7 billion.

“Plots are the rarest currency in Dubai today,” says fäm Properties CEO Firas Al Msaddi. “Currently, it’s easier to buy an apartment than to buy a plot.”

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The trend, he says, is driven by the high volume of off-plan property sales taking place in the emirate.

The number of off-plan transactions went from 40,000, or 56 percent of total sales, in the first half of 2023 to 47,600, a 60 percent share, between January and June this year, according to data from Bayut.

“The business model of real estate developers starts with the land, and with a very healthy trend of off-plan projects developers always need to identify new land to be able to develop and launch new projects,” Al Msaddi says.

Dubai Land Department data shows that 276 projects launched from the start of the year to the end of August, with 217 still active.

Across the UAE the pipeline of unawarded construction projects is estimated at $590 billion, of which residential and mixed-use development comprised 60 percent, or $357 billion, according to a JLL report from the first quarter of this year.

“Every developer is buying,” Al Msaddi says. “Some are more aggressive than others, because they’ve become a well-oiled machine to buy plots, design, launch and sell.”

With central locations filling up and demand for land still increasing, developers are having to look for plots away from the city’s core “in ‘further out’ communities that are close to completion,” says Andrew Elliott, a director at Chestertons MENA.

In Jebel Ali Hills, 40km south of Dubai Marina, there were 36 plot transfers last month alone, a sign of just how many people are seeking space to build private villas, Elliott says.

“Meanwhile, Jumeirah Village Circle has recently seen 14 transactions, showing continued growth and demand for mid-level affordability in the real estate market,” he says.

That does not mean that developers have stopped spending large amounts of money on the few prime plots left. According to Zhann Jochinke, director of market Intelligence and research at Cavendish Maxwell, August was a “bumper month” for sales value more than for the number of deals. Several large transactions worth more than AED3 billion drove that growth.

“These high value transactions include three plots at Dubai Harbour, totalling AED1.8 billion,” Jochinke says.

“At Business Bay, a number of high value land acquisitions have taken place, including one transaction for AED650 million by a major premium developer.”