International Finance
Industry Magazine

Overseas investors drive Dubai property market

Overseas investors drive Dubai property market
First-time buyers, District 2020 also leads demand for residential properties in the UAE.

According to a Coldwell-Banker Richard Ellis (CBRE) report, foreign investors, end-users, and District 2020, a human-centric city of the future, evolved from Expo 2020 as a mixed-use community that promotes well-being, will continue to drive Dubai real estate sector’s growth in 2022.

The CBRE stated that the UAE offers a complete lifestyle with excellent infrastructure to the property buyers.

According to Mortgage Finder, a tech-enabled mortgage consulting service powered by Property Finder said that roughly 82% of mortgages in the UAE were from first-time buyers intending to live in the property in 2021.

The UAE residents made up the majority of borrowers at 94%, while 90% of borrowers opted for fixed-rate mortgages.

The residential market in Dubai witnessed a record first quarter as the total volume of transactions reached 7,865 in March 2022, up 83% in 2021.

Total transaction volumes for the year ended March 2022 were 19,009, the highest total reported in any year’s first quarter. Off-plan sales surged by 94% in the first quarter of 2022, while secondary market sales increased by 76%.

According to another research report, Dubai real estate is projected to continue its golden run after Expo 2020 which ended in March 2022, as foreign investors return to the market to take advantage of the UAE’s investment potential.

Average property prices in Dubai increasing
The report noted that average property prices in Dubai increased by 11% in March 2022. During this time, average apartment prices climbed by 10%, while average villa prices increased by 20%.

The average apartment price in Dubai was $30 per square foot at the end of March 2022, while the average villa price was $344 per square foot.

Compared to the highs witnessed in late 2014, these rates per square foot for apartments and villas are 26.2% and 12.3% lower, respectively.

Downtown Dubai has the highest average sales rate per square foot in the apartment market, at $550 per square foot. In the villas segment, Palm Jumeirah had the highest average sales rate per square foot at $792.

Average rents increased
The average rent climbed by 13% in the year to March 2022, with average apartment and villa rents increasing by 11.7% and 22.5 percent, respectively.

The average apartment and villa rents in March 2022 were $21,780 and $64,917 per year. The Palm Jumeirah rental market had the highest average yearly apartment and villa rents, with average asking prices of $53,766.

Overseas investors are back
According to Zoom Property Insights, the Dubai property market attracted 52,415 investors in 2021 and recorded 72,207 new agreements worth a total of Dh148 billion in various UAE projects. It indicates a 100% increase in investment value, as well as increases of 65% and 73% in the number of investors and investments, respectively.

The Zoom Property Insights said, in 2021, foreign investors made 51,544 investments worth Dh99 billion, accounting for around 38,318 of the total investors. The Zoom Property Insight also said that this increasing momentum will continue throughout 2022.

The UAE is preparing for the International Property Show (IPS) 2022, which will attract more foreign investment. Starting from August 2022, it will welcome investors from Spain, Serbia, Montenegro, Austria, the United States, Ecuador, Canada, and Mexico.

According to Ata Shobeiry, CEO of Zoom Property, the infrastructure, lifestyle facilities, and visa reforms are some of the primary reasons supporting the return of investors to the Dubai property market.

Ata Shobeiry said that Dubai’s superb infrastructure, long-term visa options for foreign investors, and world-class facilities are just a few of the factors that draw in foreign investors. Sustainability, economic prosperity, market diversity, and good returns are just a few of the other primary reasons why investors return to Dubai real estate.

He also said that Expo 2020 plays a major role and the market will see a major boom in the coming months of 2022.

Mortgage financing plays key role
Mortgage Finder’s managing director, Mohamad Kaswani, stated that the company saw remarkable growth in 2021, with transactions exceeding the previous two years combined.

According to data from the Dubai Land Department, the mortgage business had a record-breaking year in 2021, with transaction values surpassing previous highs by 26% from 2017.

Mohamad Kaswani said that he is energized by seeing residents choosing to put down firm roots by purchasing their own homes in UAE. He said that the company had noticed the trend after following the lifting of COVID-19 lockdown restrictions back in mid-2020 and since then the trend has not slowed down.

He also said that the improved alignment between valuations and purchase prices makes the mortgage process far easier for buyers. Furthermore, it is also a sign of maturing market behavior as valuations moved in line with market changes, he added.

District 2020 holds the key
Ata Shobeiry said in addition to the return of overseas investors, the transition of Expo 2020 into District 2020 also stimulate the Dubai property market in 2022.

He also said that District 2020 will continue its legacy as a sustainable and human-centric future metropolis in the coming Expo. It will feature expansive business and retail spaces along with modern co-living, loft, or urban-style residential units.

Haider Tuaima, director and head of real estate research at ValuStrat said that they will reuse 80% of the present Expo 2020 site and will become one of five key urban centers under Dubai’s master urban plan 2040, which was revealed in early 2021.

District 2020, a future legacy of Expo 2020, will include more than 200,000 square meters of LEED-certified business and residential space, as well as 45,000 square meters of green space.

The location has a direct connection to the metro system, and three main motorways, and is 90 minutes from three international airports and one seaport, Tuaima said.

The demand has already been demonstrated from the signing of technology and innovation-focused anchor tenants such as Siemens, Terminus, DP World, and Siemens Energy.

Tuaima while citing its location and modern infrastructure said that on a strategic level there is no doubt that District 2020 will be a thriving hub for international business and act as a significant catalyst for the entire city.

According to a recent Ernst & Young report titled ‘Expo 2020 Dubai’s Economic Impact’, the event bought around Dhs122 billion to the UAE economy.

While the tourist, hotel, and food and beverage industries accounted for the majority of the revenue. Also, there has been a noteworthy increase in demand for leased flats as a result of an increase in visitors to Dubai.

In terms of future trends, Expo 2020 has opened a new focus for investors in areas such as Business Bay, Jumeirah Village Circle, Sports City, Barsha South, and areas close to the Expo site.

While hotel occupancy remains low, the development of Maktoum Airport is expected to result in a significant boost in tourism to these locations. There has been an influx of tourists who have been working from home, and this is projected to continue.

Upward trend to continue
According to Husni Al Bayari, chairman and founder of D&B Properties, the Dubai real estate market will continue to rise in 2022.

Al Bayari said in the new quarters of 2022, the UAE remains bullish on the off-plan and secondary markets. Prime locations continue to be in great demand, with many transactions taking place in the off-plan and secondary markets, he added.

He also said that with Expo 2020 Dubai, outstanding resident visa alternatives are becoming more accessible. UAE anticipates significant growth in sustainable, innovative projects in Dubai, attracting even more end-users, investors, and a new generation.

New projects to boost the market
Meanwhile, according to data issued by the Dubai Land Department (DLD), the real estate sector in Dubai will be back in the spotlight and it is displaying strong signals of long-term growth.

According to a survey of property analysts Dubai house prices are expected to grow 3% in 2022 and 4% in 2023, up from 2% and 3% three months ago.

According to the poll, the Dubai residential property market will remain stable for the next few years, with a little increase in prices. On the one hand, this shows affordability, while on the other, it indicates long-term growth.

Dubai now has a favorable climate for investment in properties, which gets further endorsed by leading real estate players who are planning new projects. Danube Group, for instance, is one among them.

The off-plan housing segment performing well in Dubai
In Dubai, off-plan property sales increased significantly in 2022. In February 2022, off-plan properties recorded Dh 4.95 billion, or USD 1.3 billion, across 2,599 sales deals. This is the largest sales value for off-plan property sales in Dubai since December 2013, and it represents an eight-year high. It is also the most off-plan trade in a single month since November 2019.

According to the survey, Arabian Ranches 3 and Villanova had the most off-plan villa and townhouse sales. In Arabian Ranches 3, 187 apartments were sold, while in Villanova, 157 were sold. Tilal al Ghaf, with 79 units, Dubai South, with 58 units, and Mohammed bin Rashid City, with 16 units, were among the other locations of interest.

According to demand for off-plan property, in August, the top regions for villas and townhouses in Dubai were Dubai Hills Estate, Arabian Ranches, Palm Jumeriah, Damac Hills 2, and Mohammed bin Rashid City.

Off-plan apartments were in high demand at Dubai Marina, Downtown Dubai, Palm Jumeirah, Business Bay, and Jumeirah Village Circle.

In addition, the average transaction price for off-plan property in Dubai increased by 53% year over year, rising from around Dh1.2 million in February 2021 to Dh1.9 million in February 2022.

In March 2021, the median price for off-plan apartment sales was Dh1.1 million, up 48% from Dh745,500 the previous year. For the month of January this year, the median price for off-plan villas and townhouses was over Dh1.8 million, up 125 from Dh1.6 million last year.

Meanwhile, Alpha Dhabi Holding (ADH), a UAE-based conglomerate, purchased an additional 17% stake in Abu Dhabi’s largest property developer Aldar Properties, taking its stake to 29.8%. In this latest investment, Alpha Dhabi Holding completed the acquisition of Sublime 2, Sogno 2, and Sogno 3, which together own 17% of Aldar Properties.

What's New

ROSHN: Shaping Saudi’s Urban Vision


Regulation around AI is needed: iQmetrix Senior VP of Revenue Jason Raymer

IFM Correspondent

The battle against SIM card theft

IFM Correspondent

Leave a Comment

* By using this form you agree with the storage and handling of your data by this website.