Dubai’s Property Market Transforms: Residential Stability vs. Commercial Boom

Significant Price Increases in Commercial Land Highlight Market Trends as Residential Flipping Becomes Rare

Dubai, UAE – [15-04-2024]: In a striking divergence within its property market, Dubai is witnessing a stark contrast between residential and commercial real estate trends. While flipping—buying and quickly reselling for a profit—has become virtually non-existent in residential properties due to stringent developer policies, the commercial sector is experiencing a dramatic rise in this activity, with prices increasing by approximately 300% in the past two years, according to ZAWYA.

The residential market in Dubai is characterized by notable stability enforced by significant developers who mandate that 30% to 50% of a property’s value be paid before resale is permitted. This policy, coupled with accelerated payment schedules, has effectively curbed the flipping of residential properties. “As far as demand for residential units is concerned, whether you’re buying under Dh1 million or Dh10 million property, we don’t have traces of flipping because the top 15 developers control 90% of the market,” explained Imran Farooq, CEO of Samana Developers, a report by Khaleej Times. He further noted that most buyers now possess a mature outlook focusing on long-term investment and habitation rather than quick profits.

Conversely, the commercial land market in Dubai has become a hotspot for speculative investments, with lands previously valued at Dh20 million now attracting significant interest from flippers. “Commercial land, which was worth Dh20 million two years back, is where the majority of the speculators have stepped in,” Farooq added, indicating a robust and active trading environment driven by substantial appreciation in land values.

Angelika Egoschin, founder of Real Estate Blondies, corroborated these observations during a recent webinar, highlighting the heightened demand and increased restrictions placed by developers on residential properties since the pandemic. This has led to a more regulated environment, reducing the feasibility of residential property flipping, which is rampant in the post-COVID recovery phase.

Dubai’s real estate market’s evolving dynamics reflect a maturation and diversification of investment strategies underpinned by regulatory changes to ensure long-term market stability and investor confidence.