2021 proved to be a landmark year for the Dubai property market. The sector bounced back with a bang in the third quarter of 2021 and recorded one of the highest property deals in Q3. The momentum from the second half of 2021 carried onto the first half of 2022. Dubai property market shows its best level since 2008 and it seems to achieve full recovery by 2022. The sector is booming due to a number of factors like Dubai Expo 2020 which attracted many visitors and investors, low-interest rates and the government’s reforms to allow 100 per cent business ownerships to the entrepreneurs and the introduction of Golden Visas.
Collectively, these factors gave tremendous impetus to the economy of Dubai.
Dubai Land Department testifies to the claims…
The Dubai Land Department (DLD) has recorded more than 80,000 real estate transactions in 2021 alone. It was an astounding figure and 71 per cent growth in terms of the value of total transactions in 2021 as compared to 2020.
With 4,083 deals recorded in January 2022, the year has already started on a high note for the Dubai luxury property sector with a significant jump in transactions of 30 per cent on a year-on-year basis. The average property prices [per square foot] also witnessed an increase of 35.1 per cent during January.
Luxury real estate sector is in limelight…
Driven by the demand from foreign investors and property buyers, the Dubai property market continues to rebound from the COVID-19 induced slump and slowdown. Not just the demand but property prices also began to recover in 2021 – particularly in the luxury real estate segment. If it is to be compared with the previous year, luxury property prices in Dubai rose by 44 per cent in 2021. The year ended with record-breaking transactions in terms of values and numbers.
Another reason that added more to the demand for luxury properties in Dubai was that the market was softened in terms of prices owing to the over-supply and the global pandemic. Local property investors made the most of the situation and invested in plush, bigger and better properties and moved to these larger homes boasting open spaces and ample space to set up remote work and online learning plans.
The huge surge in demand and investment in luxury properties in Dubai steered to a shortage of supply of prime properties, which led to an increase in property prices in the second half of 2021. A majority of real estate experts unanimously agree on this trend.
“Dubai’s investments in world-class infrastructure, health and education, coupled with the exceptional lifestyle and amenities, from the world’s best restaurants and hotels, have helped transform the city into a destination that people want to own a property in,” said Andrew Cummings, partner and head of prime residential at Knight Frank Middle East.
Knight Frank’s Prime International Residential Index 100 rankings…
Due to these record-breaking figures, Dubai ranked first in Knight Frank’s Prime International Residential Index 100 rankings, which analyses prime price performance in 100 cities and second-home markets worldwide.
“The relentless demand from the world’s wealthy has fuelled a spectacular turnaround in the fortunes of Dubai’s residential market, with the decisive handling of Covid-19 by the authorities attracting the attention of global investors,” said Faisal Durrani, partner and head of Middle East Research at Knight Frank.
“And in a sentiment-driven market, this has helped to spectacularly mark the start of the city’s third property cycle. It’s unlikely the growth of 2021 will be repeated this year, but with such limited prime stock, the top end of the market still has room for growth”.
Dubai is back with a bang…
The number of transactions indicates the renewed confidence in the Dubai property sector, which was further buoyed by the UAE government’s timely steps including the successful roll-out of COVID-19 vaccination, the decision to postpone the World Expo 2020 for a year, the introduction of new residence visas and 100 per cent company ownership. And after all these major steps, Dubai was set to flourish and prosper.
Developers understood these revolutionary changes; thus just focusing on delivering projects to cater to the needs of potential buyers, they focused more on selling properties. When property prices were falling in the secondary market, the developers sold properties in record times by offering perks such as DLD Fee waiver, service fee waiver, shifting more towards post-handover payment plans, and guaranteed returns in terms of capital appreciation before the project is ready.
Another trend of 2021 was that properties being offered to the potential buyers were of superior quality where every detail was considered. These luxury properties have modern layouts, contemporary finishes, world-class amenities, home automated systems, premium facilities and state-of-the-art communal facilities – that too, at lower prices than the developed property markets.
The potential buyers get attracted to the luxury properties that boast “something” which is not previously offered. When it comes to value for money, Dubai exceeds the expectation of buyers in terms of value for money per square foot on a global scale. Savvy real estate investors understand this terminology and tend to invest in the Dubai property market, leaving behind several developed markets.
Prime areas to invest in luxury properties…
A few prime areas that must be considered to investing in luxury properties include:
- Dubai Marina
- Downtown Dubai
- Business Bay
- Emaar Beachfront
- Dubai Silicon Oasis
A new area to be included in the list is:
- District 2020
- And communities surrounding the former Expo 2020 site
Developments to offer luxury properties…
There is a surge in branded residential projects in Dubai and a few names that must be a part of this list are:
- Six Senses Residences
- Peninsula Five
- One at Palm – Dorchester Collection
- Regis by Emaar
- Elie Saab
- Dar Al Arkan
The prices for luxury properties will continue increasing due to factors including inflation and supply issues but interestingly, so will demand. The Dubai realty market is set off towards stability and an obvious indicator is an increase in rent across several communities, which in turn will encourage more investment in the market.