Dubai Real Estate is Still Optimistic in Terms of Supply and Demand
Infrastructure for Expo 2020 and the Golden Visa, according to the real estate services company, will propel growth even further in the second half of the year.
Despite obstacles like inflation, supply chain problems, and geopolitical circumstances, the real estate market in the emirate of Dubai kept growing. According to Asteco's UAE Real Estate Report Q2 2022, this was initially supported by a robust secondary market.
Numerous new projects have been created as a result, but many Tier-2 developers have also decided to reconsider the viability of projects that have been put on hold.
The report cautioned that rising construction costs and supply chain problems pose increasing risks for developers and will probably cause delays for projects in the planning and early construction phases. However, the majority of projects have been sold with payment plans linked to construction milestones, which encourages developers to finish projects on time or even ahead of schedule.
Apartment supply increased significantly, rising from 6,000 units in Q1 2022 to 7,000 units in Q2 2022. Handovers of new villas doubled to 520 finished homes. Over the past three months, there were, however, no notable handovers of new office space.
Asteco has revised the materialization rate in the near future. By the end of the year, an additional 25,000 residential units are anticipated to be handed over.
The majority of fresh deliveries were concentrated in newly constructed areas like Port De La Mer, Damac Hills, Dubai Hills Estate, and Wasl Gate.
The Expo 2020 effect on real estate
Similar momentum seen over the previous year was maintained in the growth of rental rates. For apartments, villas, and offices, the average quarterly increases were 4%, 6%, and 3%, respectively, while the corresponding annual growth rates were 15%, 23%, and 13%.
Rental and occupancy rates were driven by resident demand for larger unit types, particularly villas and townhouses, with sufficient usable outdoor space (such as balconies and gardens) and a strong community offering.
Not only in established neighborhoods like Palm Jumeirah and Dubai Marina, but also in secondary locations with top-notch communal amenities like those near the Expo 2020 site, quality apartments in well-known neighborhoods saw an increase in interest.
Asteco thinks that a variety of industries will benefit greatly from Expo 2020's improvements to the site's infrastructure and its repurposing for years to come. In October 2022, the Dubai 2040 Urban Master Plan and the Expo 2020 Dubai Legacy Plan are anticipated to open. It is anticipated that it will develop into an independent free zone, a hub for exhibitions, tourism, and logistics, as well as an area of rapid economic expansion.
According to the report, despite the fact that rising commodity and energy prices and geopolitical developments cannot be ignored, these factors have helped Dubai maintain its status as a safe haven rather than hurting it.
Asteco anticipates that rental rates will remain high throughout the second half of the year but that rental growth will eventually slow as long as oversupply is a persistent worry.
According to the report, rental rates in Dubai Beach Residence, Dubai Marina, Downtown Dubai, and Palm Jumeirah increased by 24 percent year on year. The areas with the highest increases in villa rental prices were Dubai Hills (42%) and Palm Jumeirah (41%).
As many offices began operating on their regular schedules again, the Business Bay area saw the largest increase in office rental rates of 21%, followed by an increase of 18% in the DIFC area.
Golden Visas to boost sales
Dubai's economy has advanced significantly, whereas many international markets are still recovering from COVID-related lockdowns and restrictions.
Thanks to rising oil prices, a rebound in trade, and increased tourism, it has recovered. The first half of the year saw exceptional transaction numbers, particularly for off-plan homes and a sharp rise in sales of high-end/luxury residential units.
4,000 high-net-worth individuals are anticipated to move to the UAE this year because of the country's advanced economic, social, legal, and regulatory framework, which supports business, investment, and residency. This prediction comes from the most recent Henley Global Citizens Report.
Average sales prices for apartments, villas, and offices increased by 4%, 4%, and 2% over the past quarter, as well as by 20, 26 and 19% annually.
The two areas with the largest increases in apartment sale prices over the previous year were Palm Jumeirah (44%) and Business Bay (34%). The highest increases in villa sales prices from the first half of last year were seen in Palm Jumeirah (52%), followed by Arabian Ranches (40%).
Although the demand for off-plan homes has increased significantly, investors and end users with less money are being squeezed out by rising borrowing costs and a lack of affordable housing on the secondary market.
On the strength of advanced business reforms, government programs like the Golden Visa, and efforts to move toward a digitally driven economy, strong inward investment is anticipated to continue.
In April 2022, the UAE Cabinet revised the rules governing long-term visas, stating that a Golden Visa (10 years) could be obtained by paying AED2 million for a piece of property. The property can be mortgaged through particular regional banks and can be completed on or off-plan.
Asteco thinks the Dubai Land Department's decision to make all real estate data accessible to the public is evidence of a market that is developing and will increase transparency.
Source: Arabian Business