Dubai, United Arab Emirates
Investor confidence in Dubai’s real estate remain very strong despite volatility in different parts of the world that could increase recessionary pressures elsewhere. The launch of the increased number of new real estate projects in recent months reflect growing investor confidence in Dubai’s residential property market.
This is also reflected in the increased number of real estate and land transactions across the emirate-which is way higher that the last year’s figures. The total value of 67,000 land and property sale and mortgage transactions recorded a whopping 75.43 percent growth reaching Dh180 billion in the first 9 months of 2022, compared to Dh102.6 billion in the corresponding period last year. At this rate, the overall land and property transactions is going to create another bumper record year for the real estate sector in Dubai.
Considered the best-performing quarter in the history of Dubai’s Real Estate sector, the value of real estate sales reached Dh70 billion, confirming quarterly growth of 18% and 64.5% growth compared to Q3-2021. In the third quarter of 2022, 22 residential projects were completed consisting of more than 5,380 units.
If we look at our own activities at Danube Properties, we launched 14 projects in 7.5 years till the end of 2021. In the first 11 months of this year, we launched five new projects-a record year for us as well. Interestingly, all the first four projects were sold out at launch. This happened when property prices are going up even in the off-plan properties. This once again, demonstrates that there are more property buyers in the emirate this year than before.
The UAE economy last year recoded a growth of 3.8 percent. The International Monetary Fund (IMF), in its latest report said, the UAE economy will record a 6 percent growth this year, making it one of the fastest-growing economies in the world.
“Economic growth has been robust this year, led by a strong rebound in tourism, construction, and activity related to the Dubai World Expo, as well as higher oil production in line with the OPEC+ production agreements. Overall, GDP growth is projected to reach above 6 percent in 2022, improving from 3.8 percent in 2021,” the IMF report issued on November 21, 2022, said.
“Inflation has risen with global trends and is expected to average just over 5 percent this year. Fiscal and external surpluses have increased further, benefiting from the higher oil prices as well as the removal of the temporary COVID-crisis related fiscal support to businesses and households as the pandemic has gradually waned. Increased global uncertainty led to larger financial inflows, contributing to rapid real estate price growth in some segments.”
Looking ahead, the report says, the UAE economic outlook remains positive, supported by domestic activity, “We expect non-hydrocarbon growth to be around 4 percent in 2023 and to accelerate over the medium-term with the implementation of ongoing reforms. Inflationary pressures are projected to moderate gradually, including from the impact of tightening financial conditions. Further development of domestic capital markets, including through the issuance of local currency debt by the federal government will also support growth.”
Let us look at some other factors – to understand the market dynamics. The Knowledge and Human Development Authority (KHDA)-the regulator of Dubai’s education sector, said, the enrolment in schools have increased 4.5 percent to 326,001 in November, up from 302,262 in April this year. So, nearly 24,000 students joined Dubai’s 216 schools from June 2022 till November 2022-this shows that new families have moved in Dubai.
There is a direct correlation between school enrolment and property transaction. The question one could ask: why more and more people moving to Dubai and the UAE-while the global economic outlook has been downgraded by both the World Bank and the IMF-due to a number of factors including the ongoing Russia-Ukraine war. However, like in all other global crises, Dubai has benefitted from these crises, as it continues to attract well-off families to the emirate due to the socio-economic and political stability, safety, security, strong global connectivity, world-class infrastructure and the good quality life.
When there is trouble in any parts of the world, wealthy people relocate to Dubai-to live, work and conduct business. So, we have reasons to be hopeful for sustainable economic growth, a strong future and peaceful life in Dubai. Real estate market can only grow under these circumstances.