By Ghulam Haider
The Dubai real estate market surpassed AED 240 billion mark in 2022 recording a 61% gain compared to 2021, thanks mainly to the visionary and futuristic measures by the UAE leadership to boost the economy that encourages people from across the globe to work and settle in Emirates.
This growth has been fueled by the remarkable success of off-plan deals, which climbed by 86% compared to previous year.
As one of the leading global cities, Dubai has become the most sought after place for relocation where the people from all nationalities buy villas and townhouses which is leading to an increase in real estate investments.
The growth of the UAE has been calculated at 10.2 percent of the total wealth of the MENA region and it is projected to reach around $1 trillion of the total MEA’s financial wealth by the year 2026.
The UAE residential real estate market has become increasingly competitive. The UAE govt’s initiatives like increased spending on infrastructure, relaxed laws for foreign investors, new government initiatives to drive investments, new visa policies that eases up work and settlement options in the Emirates and new project announcements are expected to bring an overall development in the real estate sector, which will further enhance the interest of more investors.
This has also directly affected the real estate market as more and more people from the International community are choosing Dubai as a sweet spot for establishing their careers and life. The expats who are already working here are finding it easier to own homes and this has also led to a boom in the housing sector.
Dubai Land Department
In accordance to the national development vision, the Dubai Land Department (DLD) has started a new strategic plan to boost the real estate sector performance by creating an economy that has consistent performance in the current and future development strategies.
DLD envisages that the real estate investments will have a seamless service that compliments a more hassle-free legislation mechanism, incorporates a digital infrastructure system and encourages partnerships through integrated data systems and utilization of efficient human resources.
The 2022 real estate transactions recorded high-value property transactions that helped the recovery of the UAE from the post-Covid phase. So in order to maintain this streak, the real estate sector via DLD should improve upon its services to provide a more modern approach that can promote further investments in the coming years.
The strategic decision to expand the non-oil economy through tourism, tech and foreign investments has been encouraging for the UAE economy as it was one of the few nations that were not embroiled in the Covid-19 economic crisis. However, the UAE economy made an inspiring comeback ranking high in the charts of almost all developmental parameters.
Popular areas among investors
Consumer behavior took a shift in 2022 paving way for more investments in houses and residential plots that was evident towards the latter half of 2022.
Some of the main city areas like Jumeirah Village Circle, Downtown Dubai, Jumeirah Beach, Jumeirah Lakes towers, etc. were in demand for their apartment complexes. Whereas places like Palm Jumeirah, Dubai Hills Estate, Arabian Ranches, DAMAC Hills, The Springs, etc. pulled in people for their more expensive villas and townhouse areas.
As the global leader for branded residences and as per JLL’s Global Real Estate Transparency Index, Dubai is the only real estate market in the Middle East and North African (MENA) region to be included in the ‘most transparent markets’ category.
Realtors say that property prices in Dubai will increase by a margin of almost 20 percent in 2023 with the luxury residence segment dominating the margin by almost 13.5 percent.
The growth in property sector has increased so much that Dubai is estimated to see the highest initial growth rate this year moving ahead of Paris and Miami.
Multiple economic and social pressures like the threat of war, economic uncertainty, tax increase, etc. are forcing people to migrate to the UAE as the nation is trying to expand its economy by attracting talent from all over the world.
Together with Dubai, Abu Dhabi is also showing growth in its real estate sector with transaction values reaching around Dh 21.04 billion in the second half of 2022.
Zeitgeist 2022 Report
According to the recent Zeitgeist 2022 Report from Property Finder, the real estate market in Dubai experienced a record-breaking year in 2022 where registered sales reached 88,028 transactions as of November 2022, up from 60,258 transactions in 2021. This represents a significant increase of 46% and surpasses the market peak in 2013 by 38%.
Off-plan transactions value made up 44% of all transactions in 2022, up from 40% in 2021 as measured by volume, in the market, which saw a shift between these two performance categories. In contrast to 2021, when transactions were valued at about AED 44.6 billion, the value of transactions climbed to 35% of all transactions by reaching a total of AED 83 billion.
The first sales transactions for apartments saw the largest numbers (in terms of value). In contrast, the overall value of the transactions for villas/townhouses beat the previous mark established in 2021 to be the highest ever recorded.
Due to the volatile market conditions, 2022 saw shifts in consumer behavior. The market had a record-breaking performance due to rising demand, recent events and initiatives like the FIFA World Cup, the golden visa, and larger attempts to shift to a digitally driven economy. Hence, garnering more interest in the off-plan market as evident in our search trends on our portal as well.
The most frequently searched apartment neighborhoods in 2022 were in the city’s core, which continues to include the Palm Jumeirah, Downtown Dubai, Jumeirah Village Circle, Jumeirah Beach Residences and Jumeirah Lakes Towers. While Dubai Hills Estate, Palm Jumeirah, Arabian Ranches, Arabian Ranches 2, DAMAC Hills (Akoya by DAMAC), Akoya, Mohamed Bin Rashid, and The Springs are the most sought-after villa and townhouse areas.
The UAE residential real estate market is poised to register a CAGR of more than 8% during the forecast period, 2022-2027.
Future trend
Nonetheless, UAE residential property prices are set to continue rising in 2023, driven by supportive economic reforms that have helped to hasten a rebound from the coronavirus-induced slowdown, according to experts.
The UAE residential property market, which softened due to a three-year oil price slump that began in 2014 over oversupply concerns and the ensuing pandemic, has turned a page and is recovering as people move to larger homes with outdoor amenities amid a surge in remote working and online learning. In addition, economic support measures and government initiatives, such as residency permits for those who have retired and remote workers, in addition to the expansion of the 10-year golden visa program, have also helped to improve market sentiment.
Following the pandemic, there was an immediate decrease in demand for retail office spaces, as well as residential real estate. However, moving into the following years, there has been a strong reversal of this trend. In recent years, the UAE government has opened up the real estate market for expats to a larger extent, allowing for more investments. The concept of both a five-year and a ten-year residency visa has been introduced, which can be acquired through real estate investments.
