12 July 2023, Khaleej Times
What factors drive Dubai’s real estate market?
Dubai’s real estate market is poised for growth in the third quarter as two key factors come into play: the availability of financing and the steady rise in population. These factors have a significant impact on property prices, attracting potential buyers and fueling demand in the market.
In the current market climate, the accessibility of financing takes centre stage, surpassing its usual importance. As rental prices surge, many tenants are now considering homeownership as a viable option. The global increase in interest rates has affected real estate markets worldwide, including Dubai. However, the city has been relatively insulated from these effects due to its political stability and government regulations. These factors instill confidence in prospective investors and buyers, ensuring a steady flow of interest in the Dubai real estate market. This stability comes as no surprise, given that Dubai’s economy relies heavily on tourism and real estate, making the ruling families’ business and political policies key drivers of confidence for both new and existing buyers.
Another significant factor driving the market is population growth. Dubai has witnessed a consistent increase in its population year after year, directly impacting supply and demand dynamics. The Dubai Statistics Center reports a population of 3,604,030 as of July 2023, marking a rise of 88,766 individuals in the past 12 months alone. This population surge has driven up demand for properties, resulting in a natural increase in prices for available properties. Acknowledging this trend Dubai has unveiled plans to expand public beaches by 40 per cent and dedicate 60 per cent of the city’s land to nature reserves. These measures aim to ensure the sustainability of Dubai as the leading emirate and accommodate the ever-growing population influx through broader infrastructure growth plans.
Dubai’s attraction to international companies further bolsters the real estate market. Its prime location provides access to emerging markets in the Middle East and Asia, coupled with world-renowned infrastructure and favourable tax policies. As a result, demand for both residential and commercial properties continues to rise, fueled by the influx of international companies seeking to establish their presence in the region.
With the combination of accessible financing options and a growing population, Dubai’s real estate market remains robust and poised for further expansion in the third quarter. The city’s unique blend of economic stability, population growth, and international appeal solidifies its status as a vibrant and thriving real estate destination.
Dubai real estate market witnesses varied price trends in apartments and villas
The current state of Dubai’s real estate market reveals distinct trends in price changes for apartments and villas/townhouses. Analysing the average sales price percentage fluctuations, certain areas have experienced substantial growth, while established regions have also seen price increases.
Dubai Production City emerges as the top-performing area, with a remarkable 23 per cent price change over the last three months, reaching Dh744 per square foot (sqft). Following closely behind is Living Legends, witnessing a 21 per cent growth rate, reaching Dh697/sqft. These areas demonstrate the most significant percentage increase, but it is important to note that well-established regions have also experienced price growth. Al Habtoor City, for instance, has seen a 13 per cent increase, with prices reaching Dh2,058/sqft, while Bluewater’s Islands experienced a 10 per cent growth, reaching Dh4,044/sqft.
Notably, apartments have exhibited higher price changes over the past three months compared to villas and townhouses. The highest price change for villas/townhouses was observed in Jumeirah Islands, recording a 13 per cent increase, reaching Dh2,006/sqft. Despite these price fluctuations, transaction activity has not shown any signs of slowing down. In fact, according to the Dubai Land Department, the total sales transactions in Dubai rose by 57 per cent in Q2 2023 compared to the same period last year.
These dynamic price trends in Dubai’s real estate market reflect the diversity of opportunities for both buyers and investors. While certain areas experience rapid growth, established regions continue to offer lucrative investment options. The overall market remains vibrant, driven by robust transaction activity and the allure of luxury properties attracting high net worth individuals.