In November 2020, the Dubai real estate market made waves when it broke a seven-year record for transaction volume – exactly 12 months later it broke its own record, peaking in 8 years with 17, 96 billion Dh. After 11 months, the total value is 88.4% higher than the whole of 2020, which is a phenomenal comeback from the dire scenario predicted when the pandemic first struck.
Demand has been incredibly strong across all segments and house prices are on the rise. Overall, the market is expected to end 2021 on a high note, with analysts predicting a very sunny outlook for 2022. Several factors can be attributed to this remarkable turnaround – the pandemic was effectively managed from the start with strict protocols in place. , followed by a targeted vaccination campaign that led the United Arab Emirates to become the country with the highest number of vaccinations per capita. By taking a closer look at how the market performs, we can refine three key factors during 2021.
Low interest rates
Interest rates and mortgage rates are at an all-time low and for the first time in recent Dubai history, the cost of financing a home purchase puts investors in a position where they can buy from a home. higher price while achieving positive returns on rental income. Dubai has always been a top choice for investors with much more attractive returns than you might expect from other markets. When you add a low interest rate on top of that, it leads to a winning investment proposition.
Low level of stocks
One of the potential concerns in the Dubai market was oversupply, especially with the development of new communities and the launch of new ones. These concerns have always been considered exaggerated, but in a post-Covid market, we’ve seen the opposite effect. In the villa districts, especially in the main planned communities, we see a shortage of stocks as the demand has increased sharply.
Selling prices within these communities increased accordingly, allowing adjacent areas to benefit from the price increases as well. Due to the shortage of stock, we are really in a position where sellers are able to command the market price for their homes. If one buyer is too picky about pricing, several others are waiting behind the scenes and ready to pay asking price – this is not a negotiating market.
More international investors
Demand is largely driven by international investors and expats looking to make Dubai their new primary residence. It is the culmination of several government initiatives that have been rolled out over the past five years, such as lower investment thresholds, long-term visas, Golden Visas (a special category of residence visas of 10 years), the possibility for foreign nationals to have 100 percent ownership of companies, among others. Effective management of the pandemic and the buzz surrounding Expo 2020 also played an important role in building investor confidence.
When you relate the dots to the other two factors listed above, you get a picture of the perfect investment landscape. There is a greater level of security and a higher level of return in Dubai than investors would find in their home country. House prices, although higher than in previous years, are in line with the market and offer incredible value – $ 1 million can buy almost four times the square footage than in cities like London, New York and Hong Kong. And in a comparison of 25 key markets, Dubai is the only one to stand out as being undervalued.
As we head into 2022, the outlook for the property market remains bullish – the Dubai star is expected to continue to rise in the near to medium term.
The writer is COO at LuxuryProperty.com.