New Records: The Situation with Real Estate Prices in the UAE

1:43 am  |  06.04.2024

Throughout last year, there was a boom in the real estate market in Dubai and the entire United Arab Emirates (UAE). The rise is easy to follow by the numbers: in 2019, just over 36,000 real estate transactions were concluded in the emirate, in 2021 – 54,000, and 2022 – 86,000. The total amount of transactions amounted to $56.5 billion, which is 80% higher than the same figure in 2021.

2022 set an absolute sales record in the entire history of observation. At that time, some analysts assured that the Dubai market would not be able to increase volumes for a long time and would soon fall. However, fears were not confirmed, and 2023 surprises with sales volumes. 92,561 transactions were concluded in the Emirates, which is more than the entire year of 2022. Looking at these numbers, we can safely talk about a new record for the year.

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Incredible Demand: The Numbers

Real estate in relatively inexpensive categories traditionally leads in sales by price segment. This trend is explained by the fact that many people are buying square meters in Dubai to obtain a resident visa and move to the Emirates. It is possible to obtain a two-year visa by purchasing a lot costing up to $270,000, and a five-year visa by purchasing a lot costing up to $550,000.

Two real estate segments account for the maximum demand: 32% and 26% of transactions from total sales in the third quarter of 2023. More expensive lots are less popular but are still in demand. For instance, 18% of real estate transactions are for properties up to $816,000, while 14% are for properties up to $1.3 million.

An interesting feature of the real estate market in Dubai is that even extremely high-class properties are being sold here. According to Tuimaada Real Estate estimates, in 2022 the premium and ultra-premium segments of the primary market showed a 105% increase in sales compared to 2021.

In the secondary market, the rise is not so dramatic, but still sharp – 56%. Transactions in the super-elite segment, where the price tag starts at $10 million, were easy to count on one hand just 10–12 years ago. Such offers were rare; sales of such expensive objects were an event. For example, in 2011 there were only five sales in the super-elite segment. However, the boom of 2022 also affected this sector of the market – 224 transactions. Interest is also growing in 2023: 188 sales took place in the first half of the year. We expect the current year to end with a record of activity in this segment.

Interest is also growing in 2023: 188 sales took place in the first half of the year.

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Commerce and Land

Investor interest in commercial premises, offices, and street retail is very high in Dubai. Paradoxically, there are very few deals. This feature exists because more residential than commercial real estate is being built in the emirate due to limited supply. In the third quarter of 2023, the number of transactions with commercial premises was only 934.

Investors are also interested in purchasing land in Dubai. Moreover, demand is showing exponential growth. For example, in the third quarter of 2023, 2,072 land transactions were concluded, which is almost 197% more than in the third quarter of 2022.

Foreign Investment

In 2022, Russian citizens led the top buyers, their interest growing by 11–12% every quarter. They were followed by clients from India, the UK, Italy, and France.

By the third quarter of 2023, the composition of buyers has changed significantly. The first place was taken by investors from India, the second – from the UK. They are followed by buyers from Egypt and Lebanon.

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In 2022, China also led the way with a 24% share. Second place was taken by buyers from the UK with 21%, third place by investors from India with 12%.

The Purpose of Investments is not only Dubai

Dubai is not the only emirate of interest to real estate investors. Many clients of Tuimaada Real Estate prefer Abu Dhabi, a region that is slightly less popular among foreign buyers. The supply here noticeably lags behind demand, not many projects are being built, but interest in the emirate is growing. These factors suggest that long-term investment in real estate in Abu Dhabi could be an interesting opportunity for an investor.

The Abu Dhabi market is growing just as actively as the Dubai market. In the first quarter of 2023, more than 5,400 transactions were concluded, which is 66% more than in the first quarter of last year. The total amount of transactions amounted to $7.6 billion. Not only sales are increasing, but also prices: the cost of 1 sq. m. m in Abu Dhabi increased by 30% over the year.

Lesser-known emirates such as Ras al-Khaimah are showing steady growth among investors. In the first half of 2023, the volume of transactions here increased by 12% compared to the same period in 2022. The Ras al-Khaimah market is just entering a growth zone; investors are still cautious in this direction.

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