Dubai remains prime target of property investors

Bolstered by strong capital growth, high yields and government-led initiatives that incentivises investment in the property sector, Dubai continued to be a prime target for investors, according to Betterhomes, a leading property consultancy.

All segments of Dubai’s real estate market recorded growth in the first half of 2022 with sales transactions and values holding up well, Betterhomes said in its H1 2022 Dubai Real Estate Market Report.

“Despite headwinds in the form of rising interest rates and a strengthening dollar, Dubai’s real estate market remained busy and robust in the first half of 2022,” it said.

Indians topped the list leading buyers by nationality with those from the UK, Italy, Russia and France rounding the top five, according to the report.

Setting a new record for transactions in the Dubai, DLD (Dubai Land Department) recorded 37,762 total units sold from January through June this year, which is 60 per cent higher than the same period in 2021. There was also an increase of 85 per cent in the total value of sold properties compared to H1 2021.

Richard Waind, group managing director, said while globally, many real estate markets are showing signs of slowing down in the face of rising inflation and the inevitable response in the form of rising interest rates, he is confident that Dubai market “is uniquely placed to weather any short-term storm and, as we have shown throughout the pandemic, could well be a net beneficiary of global uncertainty".

He said the UAE could well be a net beneficiary of global uncertainty. High oil prices improved the UAE’s fiscal position.

“And while rising interest rates will undoubtedly have an impact, our market is less exposed to mortgages than in the majority of the world, and the typical Dubai consumer is perhaps in a better position to tolerate this normalisation of rates,” said Waind.

“Rising taxes, inflation and geopolitical instability in the West, and continuing Covid restrictions in the East, are likely to continue to push more expats to relocate to the UAE. Dubai will continue to reform employment and visa regulations to attract talent, and the DLD has taken great steps this last six months by making available all real estate data to consumers, improving transparency, and giving investors greater confidence to invest,” said Waind.

Waind said that prices in the market are showing signs of normalizing.

“Supply constraints in the secondary market have shown signs of easing in this last six months as sellers have looked to realise recent price increases. Further, developers have responded to the improved market conditions by increasing launches and bolstering the off-plan market.”

“Over the second half of the year, we can look forward to cooler weather and the World Cup, which is bound to again bring many new visitors to these shores. We will see interest rates continue to rise over the coming months, and we expect both rents and sales prices to continue to go up modestly for the remainder of the year. But historically, rates and prices still remain low, while yields and capital growth are strong, so for those taking a long-term view, Dubai real estate remains one of the best investment opportunities available,” he said.

While buyer demand increased by 23 per cent versus H1 2021, signed MoUs increased by 138 per cent year-on-year basis. Townhouses saw the highest rise in listings by 141 per cent, followed by apartments with an 18 per cent increase, while villa listings saw a modest growth of 2.0 per cent.

According to the report, investors made up 68 per cent of all transactions versus end users at 32 per cent. Some 31 per cent of transactions were mortgage-backed purchases.

Average rental prices for apartments and townhouses climbed by 29 per cent and 33 per cent and villas rose by 64 per cent, while occupancy rates in freehold areas increased to 90 per cent and leasehold areas increased to 86 per cent.