With two consecutive years of explosive growth and a double-digit price increase for 2022, Dubai has overcome the challenges of rising interest rates and inflation to remain a notable global real estate market, according to Property Monitor.
Despite a decline from 1.33 percent per month in 2021, when annual price growth was just under 16 percent, the real estate data platform said in its study that overall property price growth reached 11.05 percent in 2022, averaging 0.92 percent each month.
The Dubai real estate market had “an incredibly strong year” in 2018, as seen by the 1.17 percent increase in home prices in December. According to the Property Monitor Dynamic Price Index (DPI), property values are currently Dh 1,089 per square foot, returning to a level not seen since December 2013 during the most recent market surge and in January 2018 on the prolonged pre-Covid down cycle.
9,131 sales were recorded in December, a 10.4% decrease in the total number of sales transactions. Nevertheless, the volume of transactions for the month nevertheless exceeded expectations, making it the best December on record and nearly twice as high as every December since 2014.
With 86,849 sales, 2022 saw the residential segment’s sales performance achieve a new record high, breaking the previous record of 80,831 sales set in 2009.
“It is perhaps that Dubai cannot be truly compared, on a like-for-like basis, with any other global market owing to its unique position, whereby it has become an oasis, not just in the desert but the world real estate sector. A particular feature of the current demand curve is the stream of interest from across the globe which seems to be fuelled by a near-endless number of taps, from the impact of the Arab Spring on the previous market cycle to Covid-19 to the Ukraine-Russian conflict, and most recently the removal of restrictions in China and the reopening for travel abroad,” said Zhann Jochinke, director of market intelligence & research at Cavendish Maxwell.
A report by ValuStrat claims that due to the high demand for quality properties, villa and apartment prices in Dubai are expected to rise by between 7% to 10% citywide in 2023. Following the easing of Covid-19 limitations in China, a significant source market for the emirate’s tourist industry, Dubai is anticipated to enjoy an increase in visitor footfall this year.
The upcoming COP28, which will accommodate 140 heads of state and government and more than 80,000 participants, will benefit Dubai as well. The recently unveiled UAE Tourism Strategy 2031 is also anticipated to increase investment in tourism across a number of related industries, such as travel, aviation, and hospitality.
“With double-digit growth recorded in December, Dubai real estate has ended the year 2022 on a strong note. The same pattern can be seen in January, as the market continues its golden run, backed by the support of foreign investors and HNWIs,” said Ata Shobeiry, chief executive of Zoom Property.
According to a survey by DXBinteract.com, Dubai’s real estate industry saw sales increase by 76% in 2022 compared to 2021, with a total value of Dh265 billion. Off-plan real estate sales increased by 100% in 2022, totaling more than 52,000 deals for more than Dh124 billion.
Developers showed renewed confidence in 2022, bringing a record 53,000 units with a combined value of more than Dh155 billion to the market. According to the Property Monitor report, gross rental yields kept rising, with flats yielding just over 7%. This made capital and rental returns irresistible for many investors, while mortgage volumes remained robust, supported by an increase in bulk investor portfolio transactions.
“Should the market be able to maintain the record-setting pace of 2022 we could see in excess of 110,000 transactions next year. Property Monitor analysis, however, predicts that this is unlikely and that some steam and investor froth will inevitably come off the market and transaction volumes should moderate throughout the year ahead,” analysts at the report said.