19 September 2023, Khaleej Times
Dubai’s real estate market continues to surge at an unprecedented pace, with June observing a record-breaking Dh22.7 billion in property sales. The Dubai Land Department (DLD) reported that this accomplishment – the highest in the previous 13 years – reflects rising month-over-month figures.
The surging demand indicates a thriving market, fuelled by investor-friendly policies and regulatory changes. Similarly, the golden visa is among the many game-changing factors supporting the UAE real estate market, experts say. Foreign property investors can now obtain a long-term golden visa more easily than ever before, encouraging even more real estate investments in Dubai. “The strategic combination of these factors is pushing Dubai’s real estate segment towards long-term growth, especially with current trends indicating significant market demand and steady expansion,” Louai Abou Khzam, Co-Founder and Managing Director of Prosper Real Estate, told Khaleej Times in an interview.
As a key player in the emerging real estate arena, Louai shares his perspectives on shifting demographics, global event impacts, governmental influences, and taxation’s role in shaping the UAE real estate scene, spotlighting Dubai’s thriving property market. Established in 2022, Prosper Real Estate is swiftly gaining eminence as a premier consultancy and brokerage in Dubai, prioritizing bespoke strategies for diverse residential and commercial clients, going beyond conventional norms.
Excerpts from the interview:
What role do different economic indicators play in the ups and downs of real estate prices in the UAE? Could you elaborate on the impact of changes in the GDP growth and inflation rates on investor behaviour and property valuation?
The dynamics of real estate prices in the UAE are greatly influenced by a variety of economic indicators. These indicators shed light on the state and trajectory of the economy as a whole, which in turn affects investor sentiments and behaviours. One important indicator of a nation’s economic performance is the growth of its Gross Domestic Product (GDP). Strong GDP is typically correlated with higher consumer confidence, more job opportunities, and greater purchasing power. This favourable economic setting often encourages real estate investment, which further drives up property prices. Likewise, inflation rates are crucial to assessing an individual’s purchasing power. High inflation can erode the value of money, making real estate more appealing as an inflation hedge. As a result, property demand may rise, further driving up prices. Another important economic indicator is interest rates. Low interest rates result in lower borrowing costs, which lowers the cost of financing for property buyers. Lower rates may thus increase demand for properties and result in price appreciation. It is therefore understood that economic indicators serve as benchmarks for the broader economic climate, influencing investor confidence, demand, and financing availability, all of which contribute to price fluctuations in the UAE’s real estate market. The property market in the UAE is significantly impacted by a unique combination of economic and governmental factors, in addition to factors like tourism, expatriate population, and other strategic development initiatives.
How do supply and demand trends impact real estate market health and property prices? Could you provide instances where supply-demand imbalances have driven significant changes in property values?
Prices typically increase when demand exceeds supply as there is increased competition among buyers. On the other hand, an oversupply situation often leads to price moderation as sellers compete to attract buyers. It is evident that these changes have a significant impact on market sentiment and investment decisions. A stable, sustainable equilibrium ensures affordability for buyers and fair returns for sellers, all while fostering stability and growth. The ebb and flow of supply and demand further provides insights into the market health, which affects real estate values and assists market participants in making informed choices. For instance, Dubai’s luxury property market has recently witnessed price stabilisation as a result of a balanced supply-demand ratio. Such cases indicate the direct relationship between supply-demand dynamics and property values, highlighting the central role these factors play in determining the highs and lows of the real estate market.
In what ways do infrastructure and development projects contribute to the appreciation of property values in their respective regions? Can you share specific instances where the development of new infrastructure has benefited nearby property markets?
Advanced infrastructure often denotes urban revitalisation, which boosts a location’s popularity and thus property values. Smart technology, smart cities, as well as new transport, road, or transit hubs could all serve as growth drivers as they are expected to bring more population, and ultimately, more demand. The construction of a new highway, for example, can increase the prices of nearby houses as potential buyers now have easier access to the location. This will make it much easier for people to purchase a property and benefit from the value appreciation. A particularly famous example is the impact of the Dubai Metro, which was introduced in 2009 and has raised property values along its routes. Due to better accessibility, areas close to metro stations saw an increase in demand, which led to rising property values. The expansion of infrastructure and transportation projects during the Expo 2020 is another significant example. As a result of the increased economic activities during and after the Expo, properties located near the site enjoyed heightened demand and appreciation.
How do global events such as geopolitical shifts or economic crises affect the stability and pricing of the local property market?
Geopolitical turmoil can instil uncertainty among investors, which can lead to cautious behaviour and possibly fewer real estate transactions. Similarly, economic crises often result in reduced consumer confidence and tightened lending conditions, which decrease demand and cause price corrections. On the other hand, stronger global conditions may promote foreign investment, increasing demand and eventually property prices. These external factors underscore the interconnectedness of markets, emphasising how global shifts can impact the overall stability and pricing trends of the property market.
Could you tell us about Prosper Real Estate’s approach to the real estate market?
Prosper Real Estate is committed to empowering clients with the tools necessary to confidently navigate Dubai’s dynamic real estate, be it for investment opportunities or identifying the ideal home. Our unique approach prioritises ethical excellence and exceptional service, progressing beyond traditional brokerage. Our services encompass property sales, leasing, tailored investment solutions, and specialised expertise in off-plan projects and property management. We collaborate closely with real estate developers, aid in strategy, and prioritise growth-oriented planning. In an effort to exceed clients’ expectations, Prosper Real Estate guides them through Dubai’s real estate landscape with unwavering dedication.
How do you view the current landscape?
At present, we are noticing some interesting trends in the UAE’s real estate, particularly in Dubai. The first quarter of 2023 saw a remarkable 80 per cent surge in transactions to reach Dh157 billion, demonstrating market vitality. The rise in remote work as a result of the pandemic also played a major role in shifting housing preferences, favouring properties with home offices and reliable internet. With eco-friendly homes in high demand, sustainability is also gaining prominence. Virtual tours, enhanced transactions, and proactive government initiatives like visa extensions and ownership are all contributing to improved investor confidence, further underlining Dubai’s real estate dynamism.