Dubai housing market reacts to the economic situation in the world. The pandemic and related restrictions have changed business activity in the UAE. After a lull in the last three years, prices in the oil industry began to decline. Since 2018, there has been a decrease in demand and a slight decrease in cost. But in 2021, apartment prices in Dubai began to go up.
What influenced the price increase
During the pandemic, Dubai almost did not close the borders from tourists. The decrease in the influx of foreign citizens was largely due to their own health problems. The authorities took measures and reduced the growth rate of the disease to a minimum thanks to vaccination. Since about 80% of the city’s residents are emigrants, it is profitable for the state to attract external capital. For this purpose, favorable conditions have been created at the legislative level for moving to a permanent place of residence or conducting business activities. According to experts, the growth of demand for housing is promoted by:
- Expanding freehold areas and introducing simplified business schemes outside their territories. There are more than 50 freehold areas in the UAE. A number of industries have programs to stimulate small and medium-sized businesses.
- Holding of the exhibition “Expo-2020”. Due to the pandemic, its date was postponed to the autumn of 2021.
- Encouraging emigrants to move to the emirate. Simplified visa programs have been introduced for pensioners. A favorable tax system is another reason for buying real estate in Dubai. The home owners do not pay taxes for the ownership and disposal of property, which allows them to legally rent an apartment in Dubai and receive a stable profit.
The city’s master plan assumes an increase in the population of Dubai to 5.6 million people. An influx of citizens from other countries is expected in the UAE. Population growth implies an increase in demand for buying a property in Dubai.
Real estate market in statistics
According to https://emirates.estate/, the first half of 2021 showed a steady increase in the number of transactions compared to the same period last year by more than 70%. In value terms, the increase was 113%. Ready-made properties in Dubai are very popular. More than 70% of transactions are related to the purchase of real estate. Buyers are trying to reduce investment risks and prefer to invest in real estate in Dubai, which can be used immediately.
Shared-equity construction is accompanied by a waiting period for housing delivery, although it opens up opportunities for savings, as its cost is lower. This is the only market segment in which prices have decreased by almost 9% over the current period. Ready-made apartments in Dubai, on the contrary, rose in price by 8.7%.
The second half of the year was very active in the UAE. In July alone, almost 4,400 transactions totaling more than three billion dollars were concluded. This is the highest figure in the real estate market for the last 12 years. The pricing policy also confirms the growth of demand. Buyers are buying not only the most affordable apartments-studios and flats in Dubai. In the current season, the villas are very popular in the emirate. The amounts of some property deals are impressive. In 2021, there are the following transactions in Dubai:
- Villas on the Palm Jumeirah for $ 24 and $ 32 million.
- A villa in Jumeirah Bay Island for $ 23 million.
- A villa in Emirates Hills for $ 18 million.
And these are just a few examples of large property deals that confirm the demand for a property in Dubai. Its popularity is due to its high payback and affordable prices. If you compare the cost of apartments in such major cities as London or New York, you can make sure that for the same amount, you can buy an apartment in Dubai with an area almost twice as large. At the same time, there is no doubt about the quality of life and the development of the UAE’s infrastructure.
How housing prices change in Dubai
The average cost per square meter reaches $ 5,600. In many ways, the cost depends on the degree of comfort of the housing and the area of the location. The most popular property is located in the following areas:
- Dubai Marina. Premium-class real estate is presented in several categories. The cost of a square meter in a one-room apartment reaches $ 3800. Apartments with one or two bedrooms are sold at a price of $ 4,300 to $ 4,500 per meter.
- Downtown Dubai. Here, the studio costs $ 4,900. The apartments are comparable in value to those that are sold in Dubai Marina.
- Jumeirah Village Towers. The community has the highest cost of studio apartments, reaching $ 5,400 per meter. About 4000 is the price of a one-bedroom flat. Two-bedroom apartment can be purchased for $ 3,800.
Villas are most in demand in Arabian Ranches. The cost per square meter is in the range of $ 2000-2500. Analysts say that there is no need to wait for a decline in 2021. Most likely, there will be a slight upward trend in 2022.
Prospects of the rental and sale market
Most likely, the price increase will not exceed 3%. This is facilitated not only by an increase in demand, but also by a slowdown in construction in the UAE. This is due to obvious reasons: despite the fact that the emirate is steadily expanding, there is not enough free space for the construction of new buildings in all its central communities.
The situation with rental housing is no less interesting. On the eve of Expo-2020, prices are rising, and housing is popular with tenants. The state is trying to resolve the situation legally and introduces restrictions that will prohibit changes in prices for long-term rentals. They will affect three-year contracts, which is not entirely profitable for landlords. The rent freeze is still at the stage of announcing the bill.
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