How the Landed House Sector Has Led Dubai’s Real Estate Market into Double-Digit Capital Value?

According to the research, real estate investments in Dubai increased by 2.1 percent from Dh221 billion in 2018 to Dh226 billion in 2019, owing to a corresponding increase in real estate sales and mortgage transactions over the same time. 

According to the research, Emiratis invested about $3 billion in the city’s real estate, followed by migrant investors who invested roughly $2.2 billion. The number of Migrants acquiring property in Dubai, however, was substantially higher, with 5,426 buyers, led by Emiratis with 5,172. Saudis, Chinese, and British were among the other ethnicities who topped real estate transactions in Dubai during the preceding year. 

Dubai also has rental income that vary from 7% to 12%, which is greater than in many other worldwide towns. For example, Jumeirah Village Triangle (JVT) has the highest rental income for flats in Dubai at 9.2 percent, while seeing one of the sharpest price declines, by roughly 12%. In comparison, the rental income in London is 3.5 percent, while it is 2.82 percent in Hong Kong and 2.83 percent in Singapore. The tax-free status of Dubai makes rental revenue more valuable. Buying a commercial or residential property does not necessitate paying taxes. 

Because the pandemic has revolutionized the way offices and schools operate, there has been a rise in demand for bigger houses. Existing property owners in Dubai are increasingly switching from ordinary three-bedroom houses to more spacious 3.5BHK options that provide greater flexibility. 

Since January 2021, Dubai’s housing market has been on a boom. From the viewpoint of June 2021, each of the previous several months has been a record-breaker in terms of real estate purchases. In January 2021, 3300 property deals totaled 6.94 Bn AED, showing a 15.5 percent rise in volume and a 37 percent increase in volume over January 2020. The number of sales in March 2021 was 4643, the most in 16 months. April had 4832 sales, making it the leading month in Dubai for property sales after March 2017. 

With housing sales up 34.5 percent year after year, Dubai shook off the shadow of the preceding year’s coronavirus damage, when real estate prices collapsed to their lowest, and returned to buying and selling houses in the first quarter of 2021. 

Property analysts attributed the comeback to the UAE’s management of the pandemic situation, support efforts to increase the ease of doing business, and long-term residence legislation amendments, which all contributed to the largest number of total housing sales since 2015. 

The increase in market interest is most evident on the Palm Jumeirah, where residential sales more than doubled within the first 4 months of 2021 compared to the same period in 2020, with 700 sales registered. 

From April 2020 to April 2021, average transaction rates for properties on the Palm Jumeirah increased by 2.4 percent to 3.8 million dirhams, while average villa sale prices remained unchanged at 14.1 million dirhams ($3.8 million). 

In ultra-locations such as Emirates Hills and Palm Jumeirah, the current value of villas on a per-square-foot basis has risen by a ratio of two. Top areas such as Arabian Ranches and low-cost luxury areas such as Town Square have seen a three percent or greater growth. 

Since 2020, the industry has experienced a surge in end-user action, with locals purchasing property for residential purpose instead of as part of an investment portfolio. Residents made up more than 85% of their clientele. 

A significant increase in demand, especially for fully prepared homes, has driven up selling costs in a few areas. The majority of the price increase has been observed in established neighborhoods that have been strategically situated near major highway routes and other public infrastructure services. Asset values, on the other hand, have stayed on average 30% lower than their peak in 2014. 

The worth of villa residences in Dubai tends to grow as a result of robust demand, with the category reporting double-digit yearly rises. 

Dubai properties now are costing more than 1.6 million dirhams ($435,000), or $869 dirhams per square foot. In the year, housing sales prices are anticipated to average 1,020 dirhams per square foot, up from 894 dirhams in 2017. 

Residential capital values surged the most in villa complexes, with Arabian Ranches showing the largest annual gains of 22% over the preceding period. 

Housing prices in Jumeirah Islands increased by 20.8 percent, while Dubai Hills Estate and The Lakes increased by 18.5 percent and 18.3 percent, accordingly. 

Since the lockdowns and travel restrictions were relaxed last year, homebuyers have started buying up residential homes in Dubai. Low pricing and reasonable mortgage interest rates have contributed to the high buyer interest. 

Property prices in Dubai are predicted to grow 3.0 percent this year and 2.5 percent in 2022, up from 1.1 percent and 2.8 percent three months ago. 

The United Arab Emirates economy – a confederation of seven emirates, including Dubai – is anticipated to increase 4.2 percent in 2022. 

One of the key reasons Dubai’s housing markets stays relatively inexpensive in comparison to other global markets is because there is a plentiful supply of available properties. 

Customer preferences have switched to the finished and resale markets, with rapid occupancy as the major aim. 

On the off-plan supply front, the backlog of houses under construction will be completed. Resales of these homes, once suitable for occupation, may help to bridge the supply gap. 

Over 10,000 new units were supplied in the first quarter, with an additional 26,000 planned to be issued during the year. 

The property purchasing spree continues — by the end of October, Dubai’s real estate purchases had already surpassed the market’s total for 2020. And there are still eight weeks left in 2021 to improve on that performance. 

By the end of October, the value of Dubai’s real estate transactions had increased by 63.4 percent over the whole year 2020. The number of transactions has increased by roughly 40%. 

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