STOCK Dubai skyline
Dubai's property market delivered big in 2021. The same set of factors are still in play. Image Credit: Supplied

It is no secret that the real estate market in Dubai is seeing a boom. There have been several headlines over the past 18 months talking about a V-shaped recovery and new transactional records being set.

Before 2021 was even over, total sales were sitting at a cosy Dh177.44 billion, up more than 88 per cent from the sales figures in the entirety of 2020. Sale prices are on an upward trajectory, and it has very much become a seller’s market with a much higher likelihood of a property transacting at its asking price and no room for negotiation or offers.

All projections point to this trend continuing in 2022 – and this could really be a year for the history books. The property market in Dubai was driven by three key factors last year – more international investors, lower supply (especially in prime neighbourhoods) and low interest rates.

The first of these factors is expected to be a contributor to market performance in 2022 as well. While the Omicron variant has sent ripples of uncertainty across the world again, the UAE continues to provide a safe haven for the global community. Even as case numbers had gone up at the tail end of 2021, carefully implemented government measures and a focused drive for booster shots help to provide a level of personal safety that is hard to find anywhere else.

However, it is the other two factors – particularly the low interest/mortgage rates – that will really propel the market. Historically, markets crashes have been tied to the finance sector. Unregulated banking practices led to the global economic crisis of 2008, which caused banks to tighten their purse strings.

This in turn led to a downward spiral in the real estate market as potential buyers no longer had financing options open to them. That’s how things have always been following a crash in the market – except for the past year-and-a-half.

While there was another severe economic downturn in 2020 because of the pandemic, there was no financial component to it. Banks hadn’t suffered any setbacks and were thus still open to lending with interest rates in several markets dropping to the lowest they’ve ever been.

Low home prices and readily available lending options collided to create a bubbling volcano and demand for property erupted, unleashing a lava flow that supply couldn’t outpace. Investors have a winning proposition on their hands. Anyone who bought property when prices were low will be able to sell it for a profit, something that has not been easily achievable for the past several years.

While furnished and upgraded homes are the top of the list for new buyers, the fact of the matter is that any home priced to match the market will sell at a higher price point than it was purchased.

Another helluva year

We are looking at a gamechanging year for Dubai real estate. Market conditions are aligned in a way that they have never been in previous years, and there are many benefits to be reaped here. We are seeing this all over the world, with New York recording a phenomenal uplift in transactions over the course of 2021, especially at the market segment priced $4 million or higher.

A city like Dubai, which offers up to three times the square footage for that price, is an ideal choice for home buyers and investors at this time.

Late last year, it was estimated that Dubai housing prices might rise by 2.5-3 per cent in 2022. That estimate has since been revised to approximately 5 per cent - a sign of growing confidence in the market, new variants and other factors notwithstanding.

As Expo 2020 crosses the halfway mark and global lockdowns continue to drive foreign investors to seek out safe havens, it seems very likely that Dubai will close out the year with a new place in real estate history.