Dubai's 2022 momentum is being driven by offplan, luxury offplan to be precise. Image Credit: Gulf News Archives

Dubai’s property market has certainly picked up from where it left off in 2021, with record-breaking transactions continuing to take place in prime and super-prime neighbourhoods. This momentum is even more pronounced in the offplan sector, with local and overseas investors realising the enormous potential of the residential market. The number of high-end projects being launched this year has already given new momentum to the market with buyers ranging from local, domestic buyers to global investors from key locations as far as Monaco, Switzerland, and China.

This year, Dubai has seen a breath-taking pace of launches, with several prestige projects selling quickly. In existing communities, we are seeing expansions like at Al Barari, which launched a new sub-community of luxury and eco-conscious homes nestled in the wilderness, called ‘Ixora’. Such was the anticipation that the developer had to arrange blankets for all the brokers who slept overnight at the sales office just to secure their clients’ units. In fact, Al Barari sold out the entire community in a matter of hours, which just goes to show the levels of optimism and confidence everyone has in the market conditions here in Dubai.

Similarly, internationally acclaimed hospitality brands are appearing in the market at an unprecedented rate. We have witnessed the arrival of some globally recognised brands including Six Senses, W Residences Downtown Residences, Da Vinci Tower by Pagani, St. Regis Downtown by St. Regis Hotels and Resorts.

Rising prices in secondary market

One of the key reasons behind the resurgence of offplan has been the price increases in the secondary market. The main factors that have underpinned the rise of secondary market transactions include:

  • Government initiatives - because of its strong support to businesses and economic reforms, a water-tight vaccination drive, the demand continued to soar in the secondary segment.
  • An increase in the loan-to-value – with buyers only required to make a 20 per cent down payment, owning a property in Dubai became an affordable, hassle-free affair.
  • An increase in the loan-to-value – with buyers only required to make a 20 per cent down payment, owning a property in Dubai became an affordable, hassle-free affair.
  • Low interest rates – buyers and investors alike were encouraged by flexible financing solutions.

Because of the above-mentioned reasons, the secondary market took off, especially in prime communities such as Palm Jumeirah, Dubai Hills Estate and Downtown. This price increase in turn led to renewed interest in the offplan market with home buyers valuing a brand-new, often serviced residence more than a secondary property. Also, compared to resale properties, investing in new and upcoming projects is far more affordable, with developers offering flexible payment plans.

Another factor worth mentioning is of course, price appreciation. Projects such as Lunaria, LIV Marina and Downtown are likely to benefit from higher rental yields due to their sought-after locations, in addition to having a lucrative re-sale value. Investors who previously purchased offplan are starting to cash in on their returns with prices well above their original price.

Feeding the offplan need

The price increases in the secondary market have certainly triggered a domino effect, leading to the rise in demand for offplan projects. Buyer demand is hugely varied, and developers are racing to catch up. Some buyers require a penthouse facing the sea, while others enquire about townhouses in green, family-friendly neighbourhoods.

What’s interesting to note is that it’s not all one-way traffic, in the sense that there is a mix of investors as well as end-users, who look at Dubai as a place where they see a long-term future for themselves.

Some say Dubai’s real estate sector is a bubble, others opine the market is finally realizing its true potential. The truth, however, is that Dubai’s property segment has always been undervalued – it is only now that the market is beginning to approach its zenith. Whilst we are still some way off from peak figures in 2014, the market today is heading towards stabilization.

The deluge of new developments is a testament to the city’s resilience in the face of a global pandemic as investor confidence is restored and Dubai is seen as a destination where people want to live, work, and enjoy life.