Real estate sales increase and demand for mortgages rise in Dubai

The Dubai real estate market is showing a successful recovery after the recession that occurred in early 2020 due to the introduction of strict quarantine measures at the start of the pandemic. The year 2021 saw an active growth of investors coming to the city, due to several reasons, including the holding of the Expo 2020 world Exhibition.

The increase in international investors is directly related to the fact that the UAE has successfully managed the COVID-19 crisis, which has led to an increasing number of people thinking about moving to Dubai as a result of another possible quarantine. In addition, the connection of Dubai with international cities has contributed to attracting wealthier individuals who are ready to invest in the secondary market of the emirate, as a destination for a second home, for tourism and for recreation, as there is everything necessary for successful investments and running/starting a business: location, communication, security, stable economy and regulated market.

In addition, in 2020, the Central Bank of the UAE reduced the initial payment for all those who purchase real estate in the country for the first time by 5%. Previously the amount was 15% for nationals of the UAE and 20% for foreigners. Low-interest rates (from 1.99% to 2.39%) and changes in the loan-to-value ratio attract both local residents and residents of other countries who want to buy real estate in Dubai. Thus, 2021 was marked by an increase in mortgage transactions, which were carried out by 57% more than in 2019 (before the pandemic), where 19,520 mortgage transactions were registered by the DLD and the 2017 record was broken (an increase of 26%). According to Mortgage Finder, Q4 2021 performed particularly well with indicators of 4,187 mortgage registrations, of which 1,178 transactions worth AED 10.1B (USD 2.75B) occurred in December, which has always been considered the quietest month in the mortgage industry. Such indicators are 10% higher than the same period in 2020, and by 21% compared to 2019.

According to the forecasts of analysts of the emirate’s real estate market, it is expected that in 2022 there will be a capital growth of 4% to 5.9%, which is explained by the recovery of the Dubai economy after the COVID-19 pandemic. Separately, it should be noted that the rental index for housing in Dubai increased by 18.9% from 2014 when there was an increased demand for renting villas and townhouses. Their rental value increased by 26.8% year-on-year at the end of 2021 and by 6.3% quarterly. As for apartments, they recorded lower figures in annual terms at 14.3%, but compared to quarterly, they rose by 6.9% compared to the previous period. The increase in cost is due to the fact that an increasing number of residents are considering moving to a more spacious property. This trend can be seen in the construction itself, as the average area of real estate built in 2021 increased to 2,056 sq.ft compared to 1,905 sq.ft in 2020 and 1,528 sq.ft in 2019.

In addition, the emirate of Dubai holds the leading position in the list of the most popular destinations in the world for holidays, ahead of destinations like London, Cancun, Bali, Crete, Rome and Paris.