The Dubai real estate market is showing all the signs of a steady recovery after surviving a three-year oil price slump and a global pandemic slowdown. In fact, in the first eleven months of 2021, the Emirate recorded 55,651 property transactions worth AED 135.4B (USD 36.7B), an increase of 88.39 percent over the same period the previous year. According to the listings portal Property Finder, this is the highest sales indicator since 2014, confirming investors' strong belief in Dubai's potential.
Among other government initiatives, visa reforms, new 100 percent business ownership rules, and a successful vaccination drive are attracting real estate buyers. Not to mention the World Expo 2020, which has attracted over 6.3 million visitors since its inception in October 2021, according to Gulf Business. As a result of the positive outlook, next year appears to be a promising year for real estate investments. Let's take a look at the upcoming trends and forecasts from leading experts on what to expect in Dubai's property sector in the future.
Property Market Trends in Dubai
In the first ten months of the year, residential property prices in Dubai increased by 21%. M-o-M sales trends continue to thrive, with November seeing the highest number of sales transactions since the Expo announcement. The mega-event is expected to boost demand in residential areas such as Jumeirah Village Circle.
Despite travel restrictions, the UAE real estate market is seeing an increase in demand from foreign buyers, including from Bangladesh, Pakistan, India, and Saudi Arabia, according to Farhad Azizi, CEO of Azizi Developments. Furthermore, investors from France, Russia, and the United Kingdom appear to be very interested in Dubai's property options. As previously stated, this is due to the success of Dubai's initial COVID-19 response, which was aided by the UAE's rapid vaccine rollout. Dubai is the only major metropolitan city that has remained mostly free of restrictions this year. If the economy continues to improve through 2022, foreign demand is expected to continue into the next year.
In addition to the foregoing, a recent study by New World Wealth shows that Dubai is the 29th most popular city in the world for HNWIs and UHNWIs, with their population increasing by 3.8 percent to 54,000 from 52,000 in Q1 2021. Not only are the efficient COVID-19 measures appealing to high and ultra-high net-worth individuals, but so is the affordability of ultra-luxury property in the Emirate. Indeed, upmarket property prices in Dubai are one-fifth of those in Singapore, London, New York, and other major global cities. As a result, it's no surprise that ultra-luxury real estate has been in high demand throughout 2021. According to Faisal Durrani, Partner and Head of Middle East Research at Knight Frank, sales of residential properties worth more than AED 36.7 million (USD 10 million) account for 7% of all transactions in Dubai by value, compared to a long-term average of nearly 2%. According to a recent Zoom Property Insights report, the most popular upmarket areas are Palm Jumeirah, Downtown Dubai, and Arabian Ranches, with these areas and price ranges expected to drive the property market again next year.
Furthermore, due to trends such as remote working and community living, the Dubai villa sector is in high demand. According to Knight Frank, villa and townhouse prices have risen by 14% since January 2020.Meanwhile, the top five performing communities in terms of sales, according to DLD data, are Dubai Hills Estate, Palm Jumeirah, Emirates Living, Al Furjan, and Arabian Ranches III. However, developers who had been on the sidelines since before the pandemic, as well as those affected by the COVID-19-induced economic slowdown, appear to have capitalized on the resurgence in demand for larger homes. Nakheel Properties, for example, has announced plans to redevelop Jebel Ali Village, while DAMAC has unveiled its DAMAC Lagoons community, the centerpiece of which is a massive D-shaped lazy river. Villas are popular in Dubai, not only for purchase but also for leasing. According to Knight Frank, average villa lease rates increased by nearly 15% in the last year to AED 60 (USD 17) per square foot. However, rents for this type of property are still 25% lower than the previous market peak in 2014.
Meanwhile, the most popular apartment communities are Palm Jumeirah, Dubai Harbour, Dubai Downtown, Business Bay, and Dubai Marina. In fact, Business Bay sold two of the most expensive apartments in Dubai for AED 40 million (USD 10.89 million) and AED 37 million (USD 10.07 million).The properties that have been sold are part of the Dorchester Collection and Volante Tower projects. Other popular areas for villas and apartments include DAMAC Hills, Emirates Hills, Downtown Dubai, International City, MBR City, and Dubai Hills Estate. These areas will continue to attract investors and end-users in 2022, according to Zoom Property Insights.
Furthermore, according to Muhammad Shafi, CEO of Prescott Real Estate Development in the UAE, off-plan sales accounted for a large portion of transactions involving units worth less than AED 3 million (USD 817K). At the same time, secondary market sales accounted for a much larger proportion of property transactions worth AED 5 million (USD 1.36 million) or more. This fact demonstrates that both end-users and investors prefer more affordable off-plan developments with post-handover payment plans. Overall, 6,919 off-plan properties were sold in Q3 2021 for a total value of AED 13.48 billion (USD 3.67 billion), the highest value of sales transactions in 8 years.
The Growth of the Dubai Real Estate Market
According to a Reuters survey of real estate analysts, which included 11 experts, residential property prices in Dubai are expected to rise by 5% in 2022, more than doubling the 2.5 percent predicted three months ago. The year 2023 also anticipates a 3% increase in real estate values. At the same time, Asteco predicts a 9–10% increase in residential and commercial space rentals, as well as a 9–14% increase in luxury unit prices in the UAE in Q1 2022. The high quality of life in the UAE, as well as recent visa reforms, will entice new residents. The UAE announced Green Visas and Freelance Visas in September 2021, which are aimed at self-employed individuals and do not require sponsorship. Not to mention that the DLD reduced the minimum qualifying amount for a three-year investor visa from AED 1 million (USD 272 thousand) to AED 750 thousand (USD 205K).
According to the Dubai Residential Market Review—Autumn 2021, approximately 100,000 units are expected to be completed by the end of 2021. If at least 78,000 new homes are completed as planned, 2022 will see the highest number of new homes enter the market since 2009, when 120,000 units were completed. Nonetheless, as seen in practice, inevitable construction schedule delays will likely result in up to 30–40% of the 2022 total being pushed into 2023, or even later. Meanwhile, the Dubai real estate market is expected to see a total of 125,000 units handed over by the end of 2025. According to JLL, Dubai's residential stock increased to 629,000 properties in the third quarter of 2021, with 11,000 units added in three months. This year, it is expected that 20,175 apartments and 2,900 villas will be completed in Dubai. JLL experts also note that housing prices are one-fifth higher than they were during the 2010 loan crisis.
According to Zoom Property Insights, the Dubai real estate market experienced a 14% increase in affordable housing and a 30% increase in luxury properties as of Q3 2021. With the impact of the recently opened Expo 2020, the fourth quarter of this year is expected to follow suit. Indeed, the world fair has already resulted in an increase in demand for short-term rentals. According to Vinayak C. Mahtani, CEO of Bnbme Holiday Homes, 2021 will see a year-on-year increase of 100 percent, with 2020 previously being a productive year. Waterfront communities, such as Palm Jumeirah, Dubai Marina, and Bluewaters Island, are popular with short-term tenants. There are currently over 10,000 active listings for short-term options in the Emirate.
The following areas have been in high demand for affordable long-term rentals: Jumeirah Village Circle, Al Nahda, Bur Dubai, and Dubai Silicon Oasis. In the meantime, tenants seeking luxury apartments prefer Dubai Marina, Downtown Dubai, JBR, and Palm Jumeirah. According to the real estate consultancy Core, rental prices will continue to rise in 2022, with villa districts and prime apartment locations leading the way.
Property Prices in Q3 2021
Overall, apartment prices in Dubai rose by 14% year-on-year, while villa prices rose by 37% during the same period. Of course, property prices vary by region, so we've compiled a list of the most popular communities in terms of both apartments and villas.
The data below depicts property prices in the third quarter of 2021. Prices may vary depending on the current market conditions and the volume of transactions.
SOURCE: Metropolitan Premium Properties