Dubai Real Estate 2021 Market Recap And 2022 Projection
Dubai real estate market made headlines in November 2020 when it shattered a seven-year transactional volume record; exactly a year later, it broke its own record, achieving an eight-year high with Dh17.96 billion. After 11 months, the overall value is 88.4% larger than the entire year 2020, a remarkable turnaround from the doom-and-gloom prediction predicted when the pandemic first struck.
Demand has been extremely high across all segments, and house prices are rising. Overall, the market is expected to finish 2021 on a high note, with analysts forecasting a bright future for 2022. This extraordinary turnaround can be due to several factors: the pandemic was efficiently managed from the start with strict protocols in place, followed by a concentrated vaccination effort that resulted in the UAE becoming the country with the most immunizations per capita. When we examine the market’s performance more closely, we can identify three significant factors for the year 2021.
Interest and mortgage rates are at historic lows, and for the first time in Dubai’s recent history, the cost of financing a house purchase is allowing investors to buy at a premium while still earning a profit from rental income. Dubai has traditionally been a popular investment destination, with yields significantly higher than those seen in other markets. When you combine that with a low-interest rate, you have a winning investment proposal.
Low supply and high demand
Oversupply was one of the few concerns in the Dubai real estate market, especially with new communities being built and even newer ones being announced. Those fears were always dismissed as exaggerated, but in the post-Covid market, the reverse has occurred. We are experiencing a shortage of inventory across villa communities, particularly in core master-planned areas, as demand has surged dramatically as families now want to live in isolation unlike in apartments.
As a result, sale prices in these communities have risen, allowing surrounding places to profit from price increases as well. Due to the scarcity of inventory, we are currently in a position where sellers can command market prices for their houses. There are several more buyers waiting in the wings who are eager to pay the asking price if a buyer becomes too finicky about pricing. This is not a market for haggling.
Growing numbers of international investors
International investors and expats who want to make Dubai their new home are driving up demand. This is the culmination of various government efforts implemented over the last five years, including lower investment thresholds, long-term visas, Golden Visas (a special type of 10-year resident visas), and the opportunity for foreign citizens to possess 100% of firms. Effective pandemic management and the excitement surrounding Expo 2020 have also helped to enhance investor confidence.
2022 projection for the Dubai Villa market and what it means for investors.
In 2021, while property prices are higher than in previous years, they are in line with the market and provide exceptional value – $1 million can buy nearly four times the amount of square footage in places like London, New York, and Hong Kong. And, when 25 major markets are compared, Dubai is the only one that sticks out as being undervalued.
As we approach 2022, the real estate market prognosis remains positive; it is projected that Dubai’s real estate market will continue to grow.
According to fam estimates, the city is now constructing over 116,000 apartments. In 2022, roughly 40,000-48,000 new units will likely be handed over if just those that have passed the 75 percent completion mark are counted.
There are approximately 26,500 villas and townhouses being developed, with approximately 5,000-6,000 dwellings expected to be completed next year. Many of these would have genuine end-users moving in, implying that the rental market may not be able to meet even a fraction of the actual demand.
Additionally, there are so many villas being diverted to the holiday home market, which adds to the scarcity, said Al Msaddi the CEO of fam properties. Al Msaddi further explained that any investor with a villa would want to cash in on the very high daily rates being generated for luxury holiday properties in Dubai.
According to market sources, this conversion of villas into vacation homes or short-term rentals is adding to the scarcity of villas in Dubai’s rental market. So “Any owner with a luxury holiday home in Dubai is sitting on a goldmine.” “Homes were being leased weeks and months in advance for the end-of-year breaks. “The holiday home landlord can ask any price – and the chances are that he will get it.”, Al Msaddi said.
Are you looking to invest in luxury villas with a potential high monthly rental income? Click here