Surging Rental and Property Prices is Expected in 2022

Dubai’s real estate market is characterized by surging prices after the recovery from the COVID-19 pandemic. It’s predicted that rents will grow in 2022, and villas will become more and more in-demand due to spacious areas and opportunities to enjoy services and amenities without the need to leave the territory of the community.

As Haider Tuaima, Head of Real Estate Research at ValuStrat mentioned, since late 2015 Dubai residential rents fell by 40%, with the minimum rental value being reached in 2020 due to the pandemic. This was followed by a significant growth in capital values and record transaction sales numbers in 2021 with an increase of 18.9%. He also added that due to the popularity of villas, their rents grew 26.8% and reached numbers of 2018, while rents for apartments have also increased 14.3% and have now recovered from the 2020 fall in value.

Rachael Kennerley, Associate Director and Head of Property Management at Savills in Dubai, also states that the market is strengthening and the rental decreases had started to reverse in 2021. As for the Prime Residential World Cities Index, there has been a yearly prime rental value growth in the emirate of about 25% as for December 2021.

All rental increases will be taken into accordance with the Dubai Land Department’s Real Estate Regulatory Agency (RERA) rules. The RERA calculator partially limits the rental costs which leads to the fact that some tenants who had lower-base rents, pay less than the average cost of the rental real estate market. Property owners will massively benefit from the strength of the real estate market which will give landlords the possibility to easily find other tenants who are ready to pay a higher rental price after the end of the contract with their present tenants. Moreover, such a positive growth will free owners from 12-cheque payments, rent-free periods, etc.

Even though some experts suggest that the increase in rental prices is short-term and can only be explained by Expo 2020, the majority of real estate experts state that rents will continue to rise due to increasing job security, Emirati government initiatives and population growth due to expats coming to Dubai to work and build their own business. Therefore, it’s estimated that rental costs will grow in 2022, even though it may not be as fast compared to the previous year.

The same can be said for properties for sale, as prices are also supposed to increase in 2022. Dubai is attracting investors from all over the world due to high ROI’s, investment visas, the stable economy and the successful pandemic strategy which has had a limited impact on business. Experts say that about 36,000 units are expected to be delivered in 2022 which will lead to the narrowing of the gap between supply and demand.

The Dubai residential market had a successful year in 2021, with the delivery of 37,000 units despite COVID-19. Property transactions were at an eight-year high and costs in some communities exceeded the numbers of 2014 when the previous peak was seen. The majority of apartments delivered last year are in areas such as Dubailand (26%), Jumeirah Village Circle (17%) and Business Bay (12%). As for villas, more than 82% of  them were completed in Dubailand, specifically in Akoya Oxygen, Serena, Town Square and Villanova.

With the development of Dubai and the demand for villas, new communities are being created all over the emirate. Several days ago the developer Nakheel  was awarded a contract for the construction of 620 homes and infrastructure works at Murooj Al Furjan; an already sold-out community launched in May 2021. This part of the Al Furjan project will be set among green spaces and boasts plenty of sporting amenities.