The Dubai’s real estate sector will sustain an upward growth this year as the investors and end-users will continue to pour money in the emirate’s residential segment sector amid strong believe in the bright prospects of the economy, experts say.
Analysts, leading executives and industry stakeholders said tourism, visa reforms and labor reforms will continue to drive investment in the UAE’s real estate sector.
They expect up to 10 per cent growth in real estate prices this year due to strong demand in luxury sector as high net worth individuals and millionaires are moving to Dubai because of its stable economy, successful strategy to contain the Covid-19 pandemic and erecting excellent infrastructure.
The latest report suggests that there is a 7-10 per cent average increase in property prices in prime areas.
The Price Index saw 2022 general home prices 12.7 per cent over 2021. The VPI for prime properties increased by 14.7 per cent during the same period.
The current 7-10 per cent forecast represents the projected annual increase of overall prices, prime and non-prime properties within the freehold real estate market in Dubai.
Positive outlook for 2023
Deloitte on Saturday predicted further growth for Dubai and Saudi real estate markets this year and said strong recovery in tourism sector will benefit both the markets in the region.
In its ninth annual Middle Estate Real Estate Predictions 2023 report, the consultancy provides a positive outlook for 2023 and said all real estate segments such as hospitality, residential, retail, commercial office space and industrial will perform better this year.
2022 has been a prosperous year for residential investors who had a tough time looking back at more recent trends in Dubai.
Riyadh and Dubai continue to be attractive commercial markets as occupiers search for growth away from the Far East and Europe. Investment in infrastructure plus evolving retail and F&B offers are a social marketer’s dream which continue to draw record levels of tourists to both locations.
Strong recovery
Dubai’s residential market began to recover immediately after the pandemic in 2020, this is mainly due to the desire for increased space and lack of new build villa options, not to mention the migration of tenants to home ownership and the broader economic fundamentals which fueled the demand.
This trend accelerated the following year, but the pace of capital value growth slowed last year. 2023 is expected to see this trend decelerate further, with some locations already reaching possible price ceilings and may witness negative growth where excess supply is anticipated.
Dubai villa prices in general surged 20.5 per cent last year when compared to 2021, however the same could not be said for the majority of apartments, as capital values saw an annual increase of 6.5 per cent, with many areas seeing no change in prices for 12 months.
The Dubai property market is expected to grow further in 2023, ably supported by local and foreign investors.
The market is already getting a lot of traction due to the high interest from high-net-worth individuals. This trend is expected to continue in 2023. These reasons, along with the government's support, will help Dubai real estate to have reasonable growth, particularly during the second half.
Demand for prime areas
The current and projected market conditions are in favor of owners of Dubai residential properties, especially in sought-after locations such as the coastal areas — Dubai Marina, Jumeirah Beach Residence, Bluewaters, Beachfront, Palm Jumeirah and Port de la Mer.
The Downtown and Business Bay, Dubai Creek and Jumeirah Village Circle are also very popular among buyers. In terms of villas, the top areas of search are Damac Hills, Emirates Living, Dubai Hills, Arabian Ranches 1-2-3 and Villanova.
All indications are that real estate stock is king and owners of Dubai residential property find themselves ideally placed to make the most out of their investment, as it is estimated that the city’s population will rise from today’s 3.5 million to 5.8 million by 2040.
Ready-to-move-in properties
Referring to a recent report, he said a total of 90,881 real estate transactions were registered in Dubai last year, exceeding the historic record high in 2009 of 81,182 transactions. Off-plan property sales witnessed an increase of 92.5 per cent while secondary sales saw a 32.4 per cent rise.
This year, leading developers are expected to launch several projects and we can expect to see a 30-40 per cent increase in the number of new projects that will be announced.
The secondary market is also expected to continue its strong upward trajectory as there is considerable demand for ready properties. We can see that from the number of Dh100M+ deals that were completed last year.
In reply to a question, he said all segments are expected to show growth, but villas and luxury properties will be in very high demand as as there is very limited supply in this particular segment. There will also be demand for mid-size and lower-budget properties under Dh1 million from investors and end users.
In 2023, prices will continue to increase but we are not likely to see the same rate of increase as last year. The price increase will be driven by demand for ready-to-move-in apartments and villas due to a combination of a growing population of long-term residents and spiking interest by international HNWIs looking to invest in second homes.