Dubai has become the top destination for international investors and buyers owing to its economic stability, progressive governance, and global appeal. The real estate market in Dubai matured pre-pandemic and experts expected stabilization in anticipation of Expo 2020. However, during 2020, the pandemic and various lockdown measures caused a sharp decline in both supply and demand resulting in a drop in transactions, sale prices, and rental rates.
However, Dubai’s real estate market has strongly rebounded recently. Although the market’s performance changed for good in 2021, the first half of 2022 has concluded on a strong note, recording over 43,000 transactions worth around AED 115 billion. H1 2022 has also witnessed the launch of many successful projects and the arrival of various branded developments, which contributed to the overall increase in residential demand in Dubai.
Moreover, the month of August 2022 was the highest-performing month in 15 years, recording AED 24.3 billion in investment through 9,720 transactions. Recently, the villa sector has also witnessed healthy growth, as consumers’ demand for spacious homes has increased post-pandemic. The market is also witnessing a significant increase in the demand for ultra-luxury properties, with Q2 2022 recording a 113% YoY increase in the number of transactions above AED 10 million.
Apart from Expo 2020, the government-led initiatives have also facilitated the interest in Dubai’s real estate market.
The exceptional performance of the real estate market in recent months has resulted in an influx of foreign investors. This upward trend is expected to continue during the second half of 2022 with the influx of more international buyers and investors.
Demand
The real estate market took a hit during the pandemic but has strongly rebounded.
Pre-pandemic, the real estate industry had matured and the experts expected it to stabilize in anticipation of Expo 2020. However, in 2020, the COVID-19 pandemic and various lockdown measures caused a sharp decline in demand resulting in a decrease in transactions, sale prices, and rental rates.
Rise in Sales
Fast forward to the first half of 2022, property sales in Dubai is rising at the fastest pace ever. H1 2022 has witnessed a transaction volume of over 43,000 properties, marking an increase of 60% YoY. The first half of this year has also seen 87% YoY increase in sales value, totalling AED 115 billion worth. Q2 2022 hit an all-time high for quarterly sales in the history of the Dubai real estate market totaling 25,000 transactions marking an increase of 10% QoQ and 45% YoY. Despite summer and high-interest rates, August was the highest performing month in 15 years, as the market has recorded AED 24.3 billion investment through 9,720 sale transactions.
Consumers’ Expectations
Consumers’ behaviour and expectations have changed following the pandemic. Although ready-to-move-in villas have become the preferred choice for home buyers during the pandemic, post-pandemic, off-plan transactions are witnessing a significant increase, with special interest in spacious homes. The villa sector is witnessing a healthy growth recently with villas selling out within hours. Overall, this has led to increase in master plan projects where units come with facilities such as pools, balconies, workout zones, and open spaces.
Visa Initiatives Driving the Market
The UAE government announced new residency initiatives, including a Self-Sponsored Remote Work Visa, a Green Visa, a Retirement Visa, a Freelance Visa, and a Golden Visa.
Investors can obtain Golden Visas through acquiring an off-plan or ready-to-move property for a minimum of AED 1 million. This move will strengthen further foreign investment into the country.
Nationality for Selected Expatriates
Recently, the UAE Government has approved amendments to the citizenship law, allowing investors, professionals, special talents, and their families to acquire UAE nationality under certain conditions. This decision aims to strengthen the country’s economy in the long run, boosting the stability of the real estate market.
Cryptocurrency in Dubai’s Property Sector
Recently, top developers in UAE are accepting crypto currency to facilitate real estate transactions. Nakheel, for example, enabled its customers to pay rent, service fees, and purchase property using cryptocurrency.
DAMAC Properties and Binghatti Developers will start accepting Bitcoin and Ethereum as forms of payment for property purchases in the near future.
Expo 2020 Boosting the Market
Expo 2020 positively impacted the UAE’s economy and has boosted the real estate market.
In Q1 of 2022, the market had witnessed 80% YoY increase in transaction volume, with over 20,000 transactions. The market had also seen a massive 125% YoY surge in sales value, with nearly AED 56 billion worth.
Moreover, in terms of hospitality and immediate impact, for the month of March this year, the occupancy rates were 91.7% with an average daily rate (ADR) of AED 891.46 and revenue per daily room (RevPAR) at AED 817.90.
March 2022 marked Dubai’s first month of 90% or better occupancy in the hospitality segment since 2007.
Influx of Investors
Dubai’s real estate market surged in the first half of the year as investors boosted the sector. The top five buyers were from India, UK, Italy, Russia, and France.
The number of Russian investors has significantly increased in the first half of this year compared to the first half of 2021.
Ultra-Luxury Market
The market is witnessing a significant increase in the demand for ultra-luxury properties, especially across waterfront developments.
Q2 2022 has recorded 113% YoY increase in the number of transactions above AED 10 million.
Supply
In 2020, the market witnessed a strong decline in project handovers as the pandemic put construction activity on hold in the first half of the year.
Rise in Supply
The first half of 2022 has witnessed the launch of many successful project due to the optimism in Dubai’s real estate market. Developers are keen to invest in new project launches considering the current market conditions. In Q2 2022, around 6,500 units were added to Dubai’s residential stock. Most of the new deliveries were concentrated in new developments such as Dubai Hills Estate, Damac Hills, Wasl Gate, and Port De La Mer. Moreover, around 35,000 units are scheduled to be delivered in the H2 2022.
Branded Residential Developments
Dubai has evolved to become one of the top branded residential markets globally in the last 10 years. Branded residential properties are mainly concentrated in markets like Downtown Dubai, Marina, and Palm Jumeirah. The arrival of these prestigious brands has contributed to the overall increase in residential demand in Dubai. Top branded residential developments in Dubai include Armani Hotel and Residences, Palazzo Versace, Bvlgari Resort and Residences, and Just Cavalli Villas Akoya Oxygen.
