Dubai real estate market trends showing impressive real estate growth numbers.
Dubai’s real estate market continues bull run despite inflation. Here is an overview of Dubai real estate market:
Dubai continued to buck the trend and rise against the headwinds of inflation, supply chain issues and geopolitical situations, clocking impressive real estate growth numbers.
According to Asteco’s UAE Real Estate Report Q2 2022, both supply and demand were on the up in the emirate.
Real Estate Supply Overview in Dubai
|Completed in Q1 2022||Completed in Q2 2022||Projected end of 2022|
No. of units
No. of units
Dubai Real Estate Market for Q2 2022 Supply Rental Rates
It is important to note that whilst a number of projects may have received completion certificates, Asteco does not consider a project delivered until the handover process has been initiated and the units are available for lease in the open market.
Rental rate growth continued with the similar momentum recorded over the last year. Average quarterly increases realised 4% for apartments, 6% for villas and 3% for offices, whilst annual growth stood at 15%, 23% and 13%, respectively.
Demand for larger unit types, particularly villas and townhouses, with adequate useable outdoor areas (i.e. balconies and gardens) and a strong community offering remained the focus for residents, thus driving rental and occupancy rates.
The first half of 2022 recorded a number of successful and noteworthy project launches. These launches have been made in the wake of a renewed optimism in the real estate market, initially buoyed by a strongly performing secondary market.
Many Tier-1 developers have sought to capitalise on these tailwinds, releasing a slew of new projects. The positive market conditions coupled with increased delivery of infrastructure and facilities across master plan communities, has also led to many Tier-2 developers to revisit the feasibility of their projects previously placed on hold.
However, rising construction costs and supply chain issues represent increasing risks for developers and will likely result in delays for projects at pre/early stages of construction. Nevertheless, for those projects that are well progressed, supply side constraints are likely to be less of a hindrance.
Indeed, in many cases projects have been sold with construction milestone linked (buyer) payment plans, incentivising developers to complete projects on, or ahead of schedule. No doubt, developers are also keen to re-invest their profits into further project launches as soon as possible to capitalise on prevailing market conditions.
As such, over the short-term, we have revised our materialisation rate upwards. Apartment supply picked up markedly (from 6,000 units in Q1 2022 to 7,000 in the second quarter) and new villa handovers doubled reaching 520 completed properties.
Dubai Real Estate Market Overview Q2 2022 Sales Prices
Whilst many international markets are still coming around from past/recurring Covid-related lockdowns and restrictions, Dubai’s economy has made great strides. This economic rebound, boosted by higher oil prices and the revival in tourism and trade, resulted in exceptional transaction figures (both in terms of volumes and values) in the first half of the year, particularly with regards to off-plan properties. There has also been a marked increase in high-end/luxury residential unit sales.
In fact, according to the recent Henley Global Citizens Report (2022), 4,000 high-net-worth individuals (HNWIs) are expected to relocate to the UAE this year due to the advanced economic, social, legal and regulatory framework facilitating business, investment and residency. Average apartment, villa and office sales prices rose by 4%, 4% and 2% over the quarter and 20%, 26% and 19% annually.
Whilst demand for off-plan properties grew significantly, the increased cost of borrowing and the lack of affordable homes in the secondary market started to squeeze out investors and end-users with more limited capital/resources.
There has also been a shift in payment plans for off-plan properties whereas down payments and construction-linked instalments increased, while post-completion payments were scaled back, often with the remainder of the total value due on completion of the property.
In light of recent and further interest rate hikes, however, developers are expected to revert back to more flexible payment plans to avoid losing out on end-users and first-time buyers, who made up a large percentage of investors over the last couple of years, particularly since the traditionally transient Dubai population is increasingly adopting a long-term view on living in the Emirate.
In April 2022, the Dubai Land Department made all real estate data publicly available, a sign of a maturing market, which will strengthen transparency in the real estate market and facilitate Dubai’s journey to maturity.
Strong inward investment is expected to continue on the back of advanced business reforms and Government initiatives in regards to the Golden Visa and efforts towards transitioning to a digital-driven economy. The UAE Cabinet updated the long-term visa regulations in April 2022, stating that a Golden Visa (10 years) can be obtained when purchasing a property for AED 2 million. The property can be completed or off-plan, and it can be mortgaged through specific local banks.
The report said the first half of 2022 recorded a number of successful and noteworthy project launches, made in the wake of a renewed optimism in the real estate market. This was initially buoyed by a strongly performing secondary market.
New or Already living in Dubai and looking to rent your first home? Seeking to relocate or upgrade? Home Sweet Home Real Estate Dubai offers a plethora of choice to appeal to all lifestyle preferences one can choose to live.
We are known not only for meeting, but also, exceeding our customers’ satisfaction and expectations. Our goal is to succeed in enabling our diverse team of highly professionals to hold great service and accountability towards our prized customers which is our motto “Turning dreams into Reality”. For latest updates and more information, visit our page https://hshestate.com/blog/