What Is The Future Of The Real Estate Market In Dubai

What Is The Future Of The Real Estate Market In Dubai

     For the last two decades Dubai has become one of the most attractive destinations for many investors across the world, whether they are western investors or from Russia and China. In general, the economy has witnessed massive growth in many sectors such as the oil sector, tourism sector, transportation sector and real estate market. 

    Surprisingly the oil sector does not represent but 6%, meanwhile the real estate market represents 13% and the numbers are expected to go higher, after the pandemic the real estate market has reached the peak especially in year 2022 which has sales value estimated by 99.1 billion USD.  

    Is the real estate market in Dubai promising? And the reasons to pick Dubai over many cities and countries. 

Four reasons why Dubai is a good choice ? 

    Recently, the competition in the Gulf region has increased especially between Saudi Arabia and UAE. It might be considered as a threat for investment in Dubai, on the contrary the competition brings more opportunities for both of them. 

On the other hand there are bunch of reasons that dubai’s future is bright:

  •     A rising number of new licenses indicating a strong business sentiment – new licenses issued by Dubai Economy and Tourism in H1 2022 is 25% higher than H1 2021
  •    Increased demand for both secondary and off-plan properties evidenced by record transaction volumes reflects positive market conditions and investor confidence.
  •     New visa reforms including the Golden visa, Green visa, Freelance visa, Jobseeker visa and multiple entry tourist visas are driving an influx of visitors and residents and increasingly positioning Dubai amongst the most desirable cities for businesses, investors, tourists and expats
  •     As we go back to pre-pandemic levels with travel, mobility, occupancy levels and regulations (particularly the recent announcement that masks are no longer required, with a few exceptions) indicating a return to normalcy, we expect socio-economic sentiment to further improve.

Real estate market statistics in Dubai for 2022

  •      19,000 units delivered in 2022 a further 13,500 units are expected to be delivered in Q4 2022
  •     The apartment sales market, we witnessed a 52% rise in Q3 2022 in secondary sales transactions and 81% higher in off-plan sales transactions compared to Q3 2021
  •     In the villa sales market, we witnessed a 43% rise in Q3 2022 in secondary sales transactions while villa off-plan sales transactions were 7% lower compared to Q3 2021
  •     Dubai’s real estate market records the highest number of sale transactions above $27.2m this year
  •     The rental market is witnessing steeper rises compared to sales prices across districts leading to higher rental yields. Gross villa yields have seen an uptick from 5.1% to 5.6% year-on-year while gross apartment yields have risen from 6.1% to 7.1% year on-year

How to forecast where the real estate market headings? 

   Well, we will try to simplify the idea as much as we can and not convert it to a calculus lecture.

We will use this equation in attempt to forecast an approximate result 

𝑋n = 𝑋n(1 + 𝑔)

While 𝑋 = the value of the variable 

          𝑔 = growth rate 

          𝑛 = number of periods

     The results of this research conclude that the real estate’s demand in Dubai grew very rapidly during the last seventeen years, and this growth is expected to grow farther in the coming years. The demand for buildings is projected to increase during the projected periods

Conclusion

  Demand for real estate will keep growing further in the coming years and more investments, in this sector, are needed to meet that demand. Further, policy makers should expect further strains on government’s budgets to prepare more affordable building blocks and services, especially after the world cup 2022. 

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