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The UAE government’s deft handling of the pandemic has paved the way for the early recovery of the Dubai property market with off-plan sales adding to the surge; however, industry watchers warn prevailing global headwinds could dampen the growth while putting pressure on the pricing.
“Despite market improvement, there is a shared sentiment across the industry that an oversupply of residential properties, rising interest rates, inflation, and higher construction costs are factors to be mindful of,” said Arash Jalili, Founder and Chief Executive Officer of Unique Properties.
He warned this will likely put pressure on pricing over the coming months as the market has already seen sales transactions slow down slightly this summer.
“We predict that there will be some adjustments in the market in terms of pricing as supply and demand balance out,” he said.
While many predict that prices will stabilise over the coming months, Jalili said properties in the most popular locations will continue to hold their value and witness further increase.
Market stability
With the UAE’s proven stability through times of turbulence, Jalili said the country will remain desirable as a real estate investment hub for residents and international investors alike.
The Dubai-based property consultant noted that the market rebounded strongly from the pandemic-induced economic downturn and “the nearly 46,000 real estate transactions recorded in the first half of 2022 reinforce this.”
According to Mo’asher August data, Dubai recorded the highest sales transactions worth 24.34 billion UAE dirhams in 10 years. With 9,720 sales transactions registered in August 2022, the emirate demonstrated a significant increase in the overall performance of the sales transaction volume by 69.57 percent and 63.58 percent in terms of value year-on-year.
This progress has been propelled by the UAE’s deft handling of COVID-19, according to Jalili. Restrictions were eased in Dubai at a faster pace than in most cities around the world, and luxury residential units were accordingly purchased at a higher clip.
“We are seeing more interest recently from international buyers to buy rental investments and holiday homes in Dubai. This year, some of Dubai’s leading developers have launched several new and iconic projects that have been sold out in record time,” he said.
Off-plan sales
In the past 12 months, there has been a surge in off-plan sales for luxury villas and waterfront homes, according to the Unique Properties CEO.
“The demand for off-plan developments right now is at an all-time high,” said Jalili, who claims to have contributed 4.5 percent of the off-plan sales volume of Dubai.
According to Mo’asher data, the off-plan sales transactions attained the highest transactions volume in August 2022, recording a significant increase by 72.10 percent in terms of volume, and 76.50 percent in terms of value, compared to August 2021.
Aiding this upswing is the multitude of payment plans being offered by the developers. Increasing flexibility towards payments for off-plan projects has contributed notably to the overall growth.
Jalili explained that the investors find the rental yields from off-plan sales appealing. These properties offer investors a multitude of benefits from lower prices and increased payments options to higher capital gains.
“The already existing range of off-Plan projects is growing wider,” he said.
He added that with space and privacy becoming increasingly important for homebuyers in Dubai particularly after the pandemic, many have chosen to sell and upgrade to larger residences.
Jalili also noted that recent months saw renters turning buyers to take advantage of relatively low interest rates compared with higher rental prices.
Strong fundamentals
Dubai’s strong fundamentals backed by proactive leadership, business-friendly initiatives, and robust legal and economic policies have helped the emirate secure a place on the world map as a safe-haven, according to Jalili.
This, coupled with Expo 2020 and the ease of applying for visas, managed to draw the attention of global investors and helped reinforce Dubai’s appeal as one of the most sought-after property markets in the world.
Jalili said he expects Dubai to continue to attract local and foreign investment from across the world.
“And from an investment perspective, the benefits are endless. We anticipate that there will be increased demand from British, European, Russian, and Chinese buyers in the coming months,” he concluded.
(Reporting by SA Kader; Editing by Anoop Menon)
