Dubai real estate sector showed a continuous flow of investments since the third quarter of 2021, despite the challenges posed by the COVID-19 induced global pandemic. Not just 2021 remained exemplary but 2022 has begun with a bang for Dubai real estate sector. Multimillion dirhams’ worth of deals for Dubai apartments for sale and villas for sale were struck in 2021, with hundreds of transactions already closed since January 2022. This reflects well on investors’ confidence in the Dubai property market, which is showing signs of recovery after the temporary halt.
According to a recent report, Dubai recorded a large number of apartments and villas sales transactions worth AED61.9 billion between January and May 2022. It indicates how well the Dubai real estate market has been performing, while several other global economies are struggling to fight inflation and bring back investors to real estate markets. It is also the best time to invest in properties for sale, because the prices have not touched peak 2014 levels.
And Dubai property prices are expected to increase by 5 to 7 per cent in the mainstream market and 12 to 15 per cent in the prime market, which will provide an excellent hedge against inflation. According to Faisal Durrani, Partner – Head of Middle East Research, “There are many reasons for cautious optimism when it comes to containing inflation in the UAE. The government’s extremely diversified imports strategy, steps to boost food security in recent years and the strength of the US dollar, which is curtailing imported inflation, are all huge positives.”
The most effective measure is the UAE government’s pre-emptive approach to put a halt on the prices of almost 11,000 basic goods including milk, poultry, rice, bread and meat. The policy has been augmented by the surge in crude oil prices, which will fortify a sharp turnaround in economic growth. Referring to the data obtained from Oxford Economics, Dubai’s GDP growth is expected to rebound from about 0.5 per cent to just over 6 per cent this year – reflecting almost the last year’s growth, which is boosted by the uplift of lockdown, recommencement in global travel and Dubai’s attractiveness as a favourite real estate investment market.
According to the data issued by the Dubai Land Department (DLD), the real estate market in Dubai registered 293 sales transactions, worth AED757.33 million in the first week of June. It also includes 73 mortgage deals worth AED135.94 million and 9 gift deals worth AED16.28 million.
When the transactions were deeply analysed, 264 transactions were recorded for apartments for sale and villas for sale in Dubai, worth AED507.79 and 29 plot deals were done worth AED249.54 million. 67 apartments and villas worth AED127.44 million and 6 land plots worth AED8.5 million were mortgaged – bringing the total real estate transactions to AED909 million.
Buyers for mortgaged apartments and villas for sale account for only 18 per cent of Dubai’s residential market in terms of value, according to Knight Frank. In 2021, around 40 per cent of deals were mortgaged, while more than 50 per cent of the total deals were funded in 2007.
According to Ashley Bayliss, Partner – Head of Mortgage and Debt Advisory, Knight Frank, “The UAE’s fiscal policy correlates with the US, and the recent 50 basis point hike in interest rates to 2.25 per cent does mean higher outgoings for mortgaged households going forward. However, it remains comparable with other international prime markets.”
“While this appears to be a decrease in residential mortgage lending, as at the end of May there has been almost AED38 billion of financing extended across all real estate asset classes. Extrapolating the number of transactions, we have seen so far this year, 2022 could be on course to see the second-highest level of mortgaged deals in the last five years for the whole real estate market. The main challenge is for banks to keep pace with the current growth of the market,” stated Bayliss further.
Most of the real estate experts unanimously agree that it is high time to invest in Dubai apartments and villas for sale due to relatively lower prices and higher demand. Moreover, these properties also promise to provide a hedge against inflation and can also bring you profit in terms of capital appreciation and stable rental returns.