Another year calls for another update on the Dubai Property Market. This article will cover the current trends, pricing, and demands on the Dubai property market so far this year.
With Dubai’s residential market set to increase in 2022, we can also expect to see property prices and rent increase. In line with the trend of 2021 and on the back of the emirates ‘strong economy, this year is expected to deliver moderate increases in prices and rents as well as strong sales, according to a recent report by S&P Global Ratings.
It is also worth noting that prices have become ‘relatively affordable’ with prices twenty-five percent to thirty percent below 2014 levels, despite a significant rise in 2021.
The rising and falling prices can be largely attributed to the Coronavirus pandemic. The UAE’s property market has already strongly recovered thanks to government initiatives such as residency permits for retirees and remote workers. They have also extended the 10-year golden visa program, which has helped the market recover super quickly.
The value of property deals in Dubai more than doubled last year, which saw 12-year records broken. There were 61,241 sales registered in 2021, which we worth $41 billion. This trend has continued into 2022 and by February, residential activity in Dubai rose thirty-four percent thanks to almost seven thousand units being sold.
This figure is only set to change with the addition of 30,000 units, which should moderate price and rent increases.
February also saw the strongest ever start to the year with record transactions. Prices broke through the AED 1,000/sq ft ceiling for the first time in over three years. It was recorded that there was a 1.12% rise in property prices in February. Since falling in 2020, the Dubai property market is now 16 months into a recovery and growth cycle.
Luxury Homes in Demand
It’s safe to say luxury homes are in demand and have been since 2021. Dubai’s luxury home market is expected to thrive and continue on this trajectory in 2022 according to Zoom Property Insights.
2021 saw a huge increase in the luxury housing sector, and it was recorded at a forty percent surge in prices compared to the preceding year, despite the challenges of COVID-19. Ninety-three homes worth $10 million or more were sold in 2021.
Mr Ata Shobeiry, CEO at Zoom Property, has stated that the luxury property market will continue to rebound in 2022:
“The luxury property market will retain its upwards trajectory in 2022 with more upscale buildings and projects on the rise. Consequently, wealthy foreign investors will show more interest in the sector. The market, on the whole, will benefit from an influx of overseas investors as there’s an increase in demand from Ukrainian and Russian buyers, as well. Moreover, visa reforms, expatriate-friendly policies, and high profit earning potentials continue to attract investors from across the globe, making Dubai a lucrative market for real estate investment,” Shobeiry said.
Real estate shortages
However, due to the huge demand for luxury homes in Dubai, they are facing the prospect of real estate shortages.
“The past year has seen record demand luxurious and premium properties in the emirate. But wider macroeconomic conditions could affect how well developers are able to meet this booming demand” says Cyril Lincoln, executive vice-president and global head of real estate finance and advisory at Mashreq Bank.
When looking at this, the premium property market is witnessing healthy demand, but the challenges persist on the supply end. Lincoln expects the prices of properties to plateau at some point in the near future:
“The supply chain crisis, in particular, has affected shipping costs and pushed up the overall rates and time it takes to get things delivered. This will create an inflationary effect in terms of the cost of new construction and may act as a natural barrier when it comes to future supply; it may make people warrier with the release of their next projects”