Property prices in Dubai continue to increase at an unprecedented rate since the beginning of 2022. According to the Dubai Land Department, Q2 2022 marked the highest quarterly volume of sales transactions over the past 10 years, achieving a total of 22,504 transactions worth AED59.154 billion. We have witnessed an upward trajectory since the end of 2020, with a steadier and more notable rise in prices this year.
But what is it that makes investors want a piece of the pie in Dubai? Are they just looking for a high ROI? While ROI tops the priority list of any investor, Dubai’s overall success and status on the global stage has been one of the main reasons driving investors to choose the Emirate as a home and an investment destination.
The ‘Dubai effect’ goes beyond ROI. It is the impact of the vision of the leadership, the enabling efforts of the government, the neutrality and inclusion of the policies, the safety of the nation, the luxury of the lifestyle, the friendliness of the people, as well as the opportunity and growth potential this land has to offer. The convergence of all that in ‘one solution’ is what makes the ‘Dubai offering’ stand out globally.
Against all odds, Dubai has achieved a systemic and speedy recovery from the pandemic, emerging stronger and opening travel and investment corridors early on. Hosting the World Expo, embracing virtual properties, launching initiatives to boost foreign investment and continuing to develop infrastructure, lifestyle and luxury offerings, are all factors jointly contributing to Dubai’s leading position as a global investment hub.
It is Dubai’s overall appeal to investors and tourists that is helping the city rapidly overcome global economic and political turmoil and underpinning the property market’s rebound.
As a result, the real estate sector has seen great gains since the beginning of this year. Villa prices have doubled in the most established Dubai localities such as Emirates Living, Dubai Hills Estate and Arabian Ranches. Villas in Dubai are expected to continue to dominate the market in 2023. Key areas such as Palm Jumeirah will maintain their upward trajectory and further appreciate in value, drawing investors and homeowners looking for high ROI and upscale living.
Apartment prices have also seen about 25 percent increase since the start of the year. Prices of waterfront units such as Beach Vista at Emaar Beachfront have doubled since their launch. Five-star hotel units have seen 30 to 40 percent increase in prices.
With the current home price trends expected to continue through 2023, the price hike is likely to exceed pre-pandemic price levels. According to data released by Reuters in September this year, investors can expect an average growth of 3 percent in property prices during 2023.
The ultimate beneficiary is the investor. We’ve seen property rentals going up more than 25 percent in some areas across the emirate. Looking at the period between 2002 and 2008, early investors back then saw their property value increase by up to 300 percent.
That was the time Dubai established itself as one of the fastest growing real estate markets globally. It is during that period that we started witnessing the rise of mega projects, an increasing investor appetite and a more upscale property proposition.
Investor interest is also increasing in Dubai’s off-plan properties. The good news is prices are still reasonable and payment plans are still feasible for most investors despite the surge in demand. These are all signs of healthy growth, which is fundamental to lessening the impact of long-term price fluctuations due to the cyclical nature of the real estate sector.
Despite today’s bull market, the city’s overall housing sector hasn’t reached its 2014 peak level yet, especially in the category of residential apartments. Therefore, we are most likely to see further growth and a surge in prices.
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