After a record performance in 2021, Dubai’s property sector looks to 2022 as another promising year. Despite an economic recession in 2020 due to the pandemic, the market has remarkably rebounded thanks to well-implemented government initiatives and an increase in demand. According to DLD, total transaction values in 2021 saw a staggering 71% increase over 2020, breaking a 12-year record.
Primarily, the recovery was driven by three key factors: foreign investors, lower supply in the prime and super prime sectors, and historically low interest rates. Despite the introduction of a new corporate tax framework, the property market is expected to continue its upward trajectory.
Another important factor that will propel the market in 2022 is low interest/mortgage rates. UAE banks have been offering the lowest funding rates in years, which will lead to increased demand. This will also benefit millennials who are now reaching the peak home buying age. Therefore, strong demand is expected to come from first-time home buyers.
Due to the pandemic, many residents are choosing to move into mansion communities that offer open spaces, pristine air quality, and a nature-inspired environment. Since the start of the pandemic, villa values have jumped 14% while apartment prices have risen at a slower pace. Despite price growth across the city, Dubai remains 30% below the market peak of 2014. Not all is the case, although some areas are outperforming the market, especially in waterfront areas like Palm Jumeirah and the popular central locations such as Downtown, with prices climbing 13.7% and 8.2% respectively.
Elsewhere, larger villas in prime locations have seen a rise as people seek a home with space for a home office, outdoor space and a private pool. In the ultra-prime segment, villa sales reached a new high with prices rising 16.9% since the first quarter of 2020. Palm Jumeirah and Emirates Hills together account for almost 75% of ultra-prime transactions in the city, while Jumeirah Bay disappeared into overdrive with prices staggering 120% above where they were 18 months ago. We expect this upward trend to continue through 2022 as market conditions are favorable for buyers, sellers and end users.
This is no longer a vacation destination
Dubai is no longer seen as a vacation destination. Top-notch infrastructure, security, privacy and amenities pave the way for Dubai to become a destination families can call home. 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 in July with the sale of an ultra-luxurious mansion on the island of Jumeirah Bay for $32.9 million. Two additional record sales, rumored to be over $50 million, were also announced, demonstrating that Dubai’s super-prime market is firmly reaching new heights.
The Expo 2020 effect
With less than 50 days until the end of EXPO 2020, it’s fair to say that the greatest show on Earth lived up to its bill. The event has so far allowed millions of international visitors to experience what Dubai is all about. This has led to capital appreciation, demand for rentals in communities near the event site as well as interest in off-plan developments from international investors. As one of the first cities to open its borders to tourists, Expo 2020 will be a game-changer for Dubai’s property market in 2022.
All in all, 2022 has all the makings of a game-changing year for Dubai’s real estate landscape. Despite being perceived as a seller’s market, Dubai’s real estate market is still very undervalued compared to global cities such as New York, London or even Singapore (according to UBS). This affordable luxury comes with a resilient economy, strategic government initiatives on visa reforms, record interest/mortgage rates, and most importantly, the world-class lifestyle the city offers. Additionally, the introduction of the Federal Corporate Tax Framework in 2023 will not have a negative impact on the real estate market, as real estate transactions are exempt.
© Notice 2022
All opinions expressed in this article are those of the author
Disclaimer: This article is provided for informational purposes only. The Content does not provide tax, legal or investment advice or an opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer here.