August’s rental contracts remained strong and witnessed a 10.57 per cent increase, supported by new contracts which increased by 19.43 per cent compared to July Image Credit: Supplied

Dubai: The real estate market in Dubai saw its highest monthly performance in a decade this August, as recorded by Mo'asher. Mo’asher is Dubai’s official Sales Price and Rental Performance Index launched by Dubai Land Department (DLD) in cooperation with Property Finder.

Dubai’s real estate market recorded a total of 9,720 sales transactions in August. The combined value of these sales was Dh24.34 billion, an increase of 69.57 per cent when compared to August last year. 

The secondary real estate market led the transactions for August at over 54 per cent in volume and nearly 65 per cent in value of the total transactions recorded. As for off-plan sales, figures in August were higher by 72.10 percent in terms of volume, and 76.50 percent in terms of value, compared to August 2021.

Property Finder data revealed that the top areas searched for sales in August were Dubai Marina, Downtown Dubai, Business Bay, Palm Jumeirah, Jumeirah Village Circle, and Jumeirah Lake Towers. The top overall searched areas for villa/townhouse sales in August were Dubai Hills Estate, Palm Jumeirah, Arabian Ranches, DAMAC Hills (Akoya by DAMAC), Mohamed bin Rashid City and Dubai Land.

CBRE's report published in September revealed that average prices YoY in August rose by 8.8 per cent, where average apartment prices rose by 7.7 per cent, and average villa prices by 15.8 per cent.

The top areas for rentals, going by the number of Ejari registrations in August, were Jabal Ali First, Al Warsan First, Al Barsha South Fourth, Business Bay, Eyal Nasser, Marsa Dubai, Nadd Hessa, Mirdif, Al Barsha First, and Al Thanyah Fifth. New rental contracts also saw a substantial increase YoY, with 47,212 registered contracts - the majority of which were new contracts. Around 40 per cent of the registered rental contracts in August were renewals.

High rental yield, residency options attract investors

Dubai continues to be an attractive destination for those looking to invest in real estate as the emirate offers an average rental yield of 7 per cent, ANI reported, which is high when compared to other cities such as New York (2.8 per cent), Singapore (2.5 per cent), London (2.6 per cent), Hong Kong (2.3 per cent) and India (2.7 per cent).

In addition to the rental yield, investment in real estate also opens up avenues for long-term residency, and therefore, opportunities for tax-free income. While the UAE has always had attractive schemes for those investing in the country, updates made to the residency criteria in April make investments in the country even more lucrative. With a Dh2 million investment, real estate buyers can apply for a renewable long-term residence visa of five years.

Increased investments from India

Since 2004, Indians have been among the top 3 nationalities to buy properties in Dubai, having purchased real estate worth Dh83.62 billion from 2015 to 2021. Citizens from the UK, Italy and Russia are the other top real estate investors in Dubai.

With the CEPA deal signed between the two countries, more real estate investments are expected as business owners set up base in the UAE, to take advantage of the benefits offered by the deal. Commercial rental leases made up just over 12 per cent of the total rental contracts registered. This marked an increase of 21.34 per cent in August, when compared to July.

The liberated remittance scheme (LRS) of the Reserve Bank of India is yet another reason attracting Indian real estate investors. The scheme allows Indian citizens, who reside in India, to officially transfer $250,000 (Dh917,500) to the UAE every financial year, which can then be used for real estate investment. 

The real estate sector in the emirate boasted a strong upward trend this year, with the highest growth in volume and value of transactions since 2009, according to CBRE.