Dubai Property Market Trends: forecast for 2022

After surviving a three-year oil price slump and a global pandemic slowdown, the Dubai real estate market is showing all the signs of a steady recovery. In fact, the Emirate registered 55,651 property deals worth AED 135.4B (USD 36.7B) in the eleven months of 2021, which is up 88.39% compared with the entire year of 2020. According to the listings portal Property Finder, this is the highest sales indicator since 2014, which confirms the strong confidence investors have in the potential of Dubai.

Real estate buyers are attracted by visa reforms, new 100% business ownership rules and the successful vaccination drive, among other initiatives driven by the government. Not forgetting the world Expo 2020 which has recorded more than 6.3 million attendees since its launch back in October 2021, according to Gulf Business. As a result of the promising outlook, next year also looks bright in terms of real estate investments. Let’s check out the upcoming trends and forecasts from leading experts on what to expect in the future of the property sector in Dubai.

According to Knight Frank, residential property prices in Dubai rose by 21% in the first 10 months of the year to AED 1,235 (USD 336.28) per sq.ft in October, from AED 1,021 (USD 277) per sq.ft in January. It is worth noting that sales trends continue to thrive M-o-M and this November saw the highest number of sales transactions since the announcement of Expo 2020 in Q3 2013, having recorded 7,000 deals amounting to AED 17.9B (USD 4.9B). The ever-lasting effect of the world fair is starting to show and it is expected to become one of the main driving forces behind the Dubai real estate market in 2022 as well. As stated by Chris Speller, Cityscape Group Director, the mega-event is set to promote the high demand in residential neighbourhoods, such as Jumeirah Village Circle, Sports City, Business Bay, Barsha South and areas which lie in close proximity to the Expo 2020 site and Al Maktoum International Airport. The latter, also known as Dubai World Central, is currently being expanded and will be fully open to the public in 2030, thus boosting tourist activity to the previously mentioned areas.

In spite of travel restrictions, the Emirates real estate market is witnessing a boost in demand among buyers from abroad, including Bangladesh, Pakistan, India and Saudi Arabia, according to Farhad Azizi, CEO of Azizi Developments. Moreover, investors from France, Russia and the UK also seem to be very interested in Dubai’s property options. As we mentioned earlier, this is thanks to the success of Dubai’s initial COVID-19 response, promoted by the speed of the UAE’s vaccine rollout. Dubai is the only major metropolitan city to remain mostly restriction-free throughout this year. With sustained economic improvements over 2022, foreign demand is set to continue into the next year.

As well as the above, the recent study by New World Wealth shows that Dubai is the 29th world’s most popular city for HNWIs and UHNWIs since their population rose 3.8% to 54,000 up from 52,000 in Q1 2021. Both high and ultra-high net worth individuals are attracted by not only the efficient COVID-19 measures, but also the affordability of ultra-luxury property in the Emirate. In fact, prices of upmarket properties in Dubai are on average one-fifth of those in Singapore, London, New York and other major global cities. So, it’s no surprise that ultra-luxury real estate has been highly popular throughout 2021. According to Faisal Durrani, Partner and Head of Middle East Research at Knight Frank, sales of residential properties worth over AED 36.7M (USD 10M) account for 7% for all transactions in Dubai by value, compared to a long-term average of nearly 2%. As seen in the recent report by Zoom Property Insights, the most popular upmarket areas are Palm Jumeirah, Downtown Dubai and Arabian Ranches, with these areas and price range expected to drive the property market next year as well.

Moreover, the Dubai villa sector is in high demand, spurred on by trends including remote working and community-living. As reported by Knight Frank, villa/townhouse prices rose by 14% from January 2020. Meanwhile, as the DLD data shows, the top 5 performing communities in terms of sales are Dubai Hills Estate, Palm Jumeirah, Emirates Living, Al Furjan and Arabian Ranches III. That being said, developers who have been waiting on the sidelines since before the pandemic and those who were affected by the COVID-19 induced economic slowdown appear to have capitalized on the resurgence in demand for larger homes. For instance, Nakheel Properties has announced its plans for the redevelopment of Jebel Ali Village, while DAMAC has unveiled its DAMAC Lagoons community, the centerpiece of which is an enormous D-shaped lazy river. In Dubai, villas are popular not only in terms of purchases but also leasing. In fact, average lease rates for villas surged by almost 15% over the last 12 months to AED 60 (USD 17) per square foot, as reported by Knight Frank. However, rents for this type of property still remains 25% below the last market peak in 2014.

Meanwhile, the most popular communities for apartments are Palm Jumeirah, Dubai Harbour, Dubai Downtown, Business Bay and Dubai Marina. In fact, Business Bay sold two of the most expensive apartments in Dubai for AED 40M (USD 10.89М) and AED 37M (USD 10.07М). The sold properties are part of the Dorchester Collection and Volante Tower projects. Other in-demand areas for both villas and apartments include DAMAC Hills, Emirates Hills, Downtown Dubai, International City, MBR City and Dubai Hills Estate. According to Zoom Property Insights, these areas will continue to attract investors and end-users in 2022 as well.

Moreover, according to Muhammad Shafi, CEO at Prescott Real Estate Development, in the UAE, off-plan sales accounted for a big share of the transactions with units worth under AED 3M (USD 817K). At the same time, secondary market sales contributed a much larger share in property transactions worth AED 5M (USD 1.36M) and above. This fact confirms that both end-users and investors opt for more affordable off-plan developments, which include post-handover payment plans. All in all, during Q3 2021, there were 6,919 off-plan properties sold at a total value of AED 13.48B (USD 3.67B), the highest value of sales transactions in 8 years. In terms of Q-o-Q, the volume and value of the primary market’s deals increased by 115% and 212%, accordingly. The swift rebound of the off-plan real estate market is due to the response to changes in consumer preferences and releasing new projects that match the current demand in the market. At the same time, the secondary market witnessed sales of 9,590 properties in the third quarter of 2021 and its transaction volumes and values rose by 68% and 110%.

The Reuters survey of real estate analysts’ views, which involved 11 specialists, states that prices of residential properties in Dubai are set to rise by 5% in 2022, double the 2.5% increase predicted three months ago. The year 2023 also expects a surge of 3% in real estate values as well. At the same time, Asteco predicts a 7-9% increase in rentals of both residential and commercial spaces and a 9-14% surge in prices for luxury units in the UAE in Q1 2022. New residents will be attracted by the high quality of life in the UAE and recent visa reforms. As of September 2021, the UAE announced Green Visas and Freelance Visas which are aimed at self-employed individuals, without a need for sponsorship. Not forgetting that the DLD slashed the minimum qualifying amount for a 3-year investor visa, from AED 1M (USD 272K) to AED 750K (USD 205K).

In terms of supply, as reported by the Dubai Residential Market Review│Autumn 2021, there are about 100,000 units due for completion before the end of 2021. If at least 78,000 homes are delivered as planned, then 2022 will see the highest number of new homes entering the market since 2009, when 120,000 units were commissioned. Nevertheless, as seen in practice, inevitable postponements of construction schedules will likely mean up to 30-40% of the 2022 total will be pushed into 2023, or even later. Meanwhile, by the end of 2025, the Dubai real estate market is set to witness a handover of 125,000 units in total. As for this year, according to JLL, the residential stock of Dubai increased to 629,000 properties in Q3 2021, with an addition of 11,000 units within three months. It is estimated that 20,175 apartments and 2,900 villas will be commissioned in Dubai this year. Experts of JLL also note that housing prices are one-fifth higher compared to prices during the 2010 loan crisis.

As of Q3 2021, the Dubai real estate market registered a 14% spike in affordable housing and up to a 30% increase in luxury properties, according to Zoom Property Insights. The fourth quarter of this year is set to follow the lead, what with the impact of the recently opened Expo 2020. In fact, the world fair has already caused a surge in demand among short-term rentals. According to Vinayak C. Mahtani, CEO of Bnbme Holiday Homes, 2021 registered a growth of 100% Y-o-Y, with 2020 previously being a productive year. Short-term tenants tend to choose waterfront communities, such as Palm Jumeirah, Dubai Marina and Bluewaters Island. Currently, there are more than 10,000 active listings of short-term options in the Emirate.

As for affordable long-term rentals, the following areas have been in high demand: Jumeirah Village Circle, Al Nahda, Bur Dubai and Dubai Silicon Oasis. Meanwhile, tenants searching for luxury units prefer the ever-popular Dubai Marina, Downtown Dubai, JBR and Palm Jumeirah. According to the real estate consultancy Core, rental prices will keep rising in 2022 as well, with villa districts and prime apartment locations leading

All in all, apartment sale prices in Dubai increased by 14% Y-o-Y and villa prices increased by 37% during the same period. Of course, property costs in each area vary, so we have compiled a list of the most popular communities in terms of both apartments and villas.

NB! The below-mentioned data shows property prices during the third quarter of 2021. Price rates may range depending on the current market climate and the amount of transactions.

Apartments

Villas

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Judging by the above-mentioned tendencies, now may be the perfect time to consider investing in the Dubai real estate market. It is recommended to do research on various real estate investment options, their advantages and the factors that may impact your potential income.

The relevant solution is to hire a licensed broker who will familiarize you with the peculiarities of the Dubai real estate market, help you identify a reliable developer, and choose a project and location that will be most profitable for you. In addition, an experienced realtor will be able to tell you why investing in Dubai real estate is a profitable investment and help you reduce all the possible risks of buying by properly compiling your investment portfolio.