After a record-breaking performance in 2021, Dubai’s real estate sector is looking at 2022 as another promising year. Despite an economic slump in 2020 due to the pandemic, the market rebounded remarkably due to well-implemented government initiatives and a surge in demand. According to DLD, the total transactional values in 2021 saw an increase of a staggering 71 percent when compared to 2020 – shattering a 12-year record.

Primarily, the recovery was led by three key factors - overseas investors, lower supply in prime and super prime areas and record-low interest rates. Despite the introduction of a new corporate tax framework, the property market is expected to continue in an upward trajectory.

The emergence of the Omicron variant has done little to dissuade people from buying real estate in Dubai, as sound government measures have helped curb the spread. In fact, 88 percent of the population have received two vaccination jabs – making the city a haven for people all over the globe. These measures resulted in boosting market sentiment, and according to Oxford Economics, Dubai’s GDP is forecast to expand and reach 5 percent this year.

Another important factor that will propel the market in 2022 is the low interest/mortgage rates. Banks in the UAE are offering the lowest financing rates in years, which will give rise to increased levels of demand. This will also benefit millennials who are now hitting peak homebuying age. Therefore, a lot of demand is expected to come from first-time home buyers.

Changing perceptions

Because of the pandemic, a lot of residents are opting to move into master villa communities that offer open spaces, pristine air quality and nature-inspired surroundings. Since the start of the pandemic, villa values have jumped by 14 percent whereas apartment prices increased at a lower rate. Despite the price growth across the city, Dubai remains 30 percent below the market peak in 2014. Everything is not even though with some areas outperforming the market, particularly in waterfront locations like Palm Jumeirah and popular central locations such as Downtown, with prices climbing by 13.7 percent and 8.2 percent respectively.

Elsewhere, larger villas in prime locations have seen a rise as people are looking for a house with space for a home office, an outside area and private pool. In the ultra-prime segment, villa sales hit a new high by experiencing a 16.9 percent rise in prices since Q1 2020. Palm Jumeirah and Emirates Hills together make up almost 75 percent of ultra-prime transactions in the city, whilst Jumeirah Bay has gone into overdrive with prices at a staggering 120 percent above where they were 18 months ago. We expect this upward trend to go well into 2022 as market conditions are favourable to buyers, sellers and end-users.

No longer a holiday destination

Dubai is no longer perceived as a holiday destination. The infrastructure, safety, privacy and first-rate amenities are paving way for Dubai to become a destination that families can call home. Ultra-high net worth buyers from the Middle East, Europe and North America have their eyes set on the most exclusive homes in Dubai. In fact, a new record was set during July with the sale of an uber-luxury mansion on Jumeirah Bay Island for $32.9 million. Two additional record sales rumoured to be over $50 million have also been announced, demonstrating that the super-prime market in Dubai is firmly hitting new heights.

The Expo 2020 Effect

With less than 50 days before EXPO 2020 wraps up, it is fair to say that the grandest show on Earth lived up to its billing. The event has so far given millions of international visitors an exposure to what Dubai stands for. This has resulted in capital appreciation, a demand for rentals in communities near to the event site as well as interest in off-plan developments from international investors. As one of the first cities to open its borders for tourists, Expo 2020 is going to be a gamechanger for Dubai’s real estate market in 2022.

All in all, 2022 has all the makings of a ground-breaking year for Dubai’s real estate landscape. Despite being perceived as a seller’s market, Dubai’s property market is still very much undervalued when compared to global cities such as New York, London or even Singapore (as per UBS). This affordable luxury comes at the back of a resilient economy, strategic government initiatives on visa reforms, record-low interest/mortgage rates and above all, the world class lifestyle that the city offers. Moreover, the introduction of federal corporate tax framework in 2023 will not impact the property market in an adverse way as real estate transactions are exempt from it.