The past two decades have seen significant fluctuations in the Dubai housing market. Between 2002 and 2008, the city experienced rapid growth and real estate prices quadrupled, making it one of the fastest-growing cities in the world.
Foreign investment also increased significantly after the government passed a law in March 2006 allowing foreigners to own property. This led to billions of dollars being invested in large-scale projects like Jumeirah Garden City, Dubailand, The Lagoons, Palm Jumeirah, and The World.
The Dubai housing market has seen a remarkable recovery in recent years. Despite the COVID-19 pandemic, the UAE government’s decision to keep the borders open and implement mandatory testing and mask-wearing measures has contributed significantly to the market’s growth. In 2021, the prices for apartments and villas in Dubai increased by an average of 9.25%, and the trend continued in 2022 with a growth rate of 9.53%. The registered real estate transactions in the emirate increased by 44.7% compared to the previous year, and the total transaction value reached a record high of AED 528 billion ($143.8 billion), which is a substantial increase of 76.5% from the previous year.
The government’s decision to reduce the investment threshold for a 10-year “golden visa” to 2 million UAE dirhams (545,000 US dollars), with the possibility of buying an object under construction, has also had a significant impact.
The Dubai real estate market has been in a strong growth phase since 2021, with each quarter showing better performance than the previous one. According to DXB Interact, the first quarter of 2023 was the highest in the history of the Dubai real estate market (since 2014), both in terms of the number of transactions and in terms of sales. The total sales value reached AED 88.7 billion.
Most investors believe that the summer season can lead to a drawdown of the market due to rising temperatures. However, last year’s experience shows that such fears are not justified.
The government of Dubai strictly ensures that the interests of investors are protected. It is introducing new amendments and changes to the legislation aimed at eliminating various kinds of manipulations that lead to investor disappointment. Transparency, simplicity, and speed of completing real estate transactions are Dubai’s undeniable advantages over many other markets. Investors constantly receive new opportunities and privileges, being under the protection of the state.
Another important factor is the flexibility of the UAE government in international politics, as well as constant steps toward strengthening and developing new political alliances. Such wise actions lead to a noticeable rise in the economy and active growth of the population, which, as you know, consists of 80% of expats. Hence the colossal need for housing in all price segments.
The real estate market is subject to such a phenomenon as cyclicality – growth will certainly be followed by a decline, and vice versa. Dubai is now experiencing its third cycle of rapid growth in the 21st century after two previous booms followed by adjustments in 2009 and 2015.
Property prices in Dubai increased by 16-19% last year, but they are still below the peak of 2014. According to Knight Frank, experts expect the Dubai real estate market to grow by 13.5% in 2023.
The main trend of 2023 is the ultra-luxury market. This is due both to the growing number of foreign investors and the migration of rich people. Today, wealthy buyers have almost nothing to buy. The reason why the demand for such properties remains is simple – the cost of luxury housing in Dubai has increased by 89% over the year. We don’t expect a decrease in demand for the elite segment soon.
Next comes the inexpensive segment – up to $ 350,000. Such objects are immediately bought – this can often be seen in real-time on DXB Interact. There are fewer offers on the market than there are requests. However, just having time to buy an inexpensive unit is not enough. It is important to pay attention to the details so as not to be disappointed later: choose a floor, with a view that no one will block the neighboring building, and take into account other points. It’s worth hunting for such offers: this segment has an attractive price, and these apartments quickly pay off.
The Dubai real estate market is growing for internal and external reasons and is not overvalued. The population of the emirate is actively increasing due to migration and, the demand for housing and prices for apartments and villas continue to go up.
Finally, one of the main arguments of those who are optimistic about the Dubai market is that prices for luxury real estate here are still significantly lower than in other metropolitan areas (7 times lower than in Hong Kong and 5.5 times lower than in London).