There's no doubt that the post-Covid era has been a period of drastic change around the world. But with much of the global economy still reeling from the aftermath of the pandemic, it's impressive to note how the UAE, and Dubai in particular, has bounced back with full force. Based on the data and trends seen on Bayut, the region's preferred property portal, the real estate sector has had a significant role to play in pushing brand Dubai to the world.
Over the past few years, Dubai has established itself as the place to be, whether people are looking for long-term residency, a vibrant market in which to establish a business, or the chance to invest in lucrative real estate. From creating an investor-friendly ecosystem to introducing long-term and flexible visa policies, the emirate has ensured remarkable stability when it comes to cultivating a thriving economy.
These policies have also helped Dubai’s real estate sector grow exponentially over the past year.
“There is absolutely no doubt that Dubai is experiencing a property boom unlike any other,” says Haider Khan, CEO of Bayut and Head of Dubizzle Group, the Middle East and North Africa.
“Backed by a growing economy full of opportunity, not only has Dubai become a brand to be reckoned with, thanks to the safety, infrastructure, government support and overall positive outlook of the emirate, the city has also very successfully strengthened its hold as a popular metropolis everyone in the world wants to be associated with. Lots of talented people from all walks of life across the globe are making their way to Dubai because of its appeal as a place that’s full of opportunity.”
Rise in rental prices
Recent trends have shown an unprecedented spike in the demand for properties across the emirate, particularly in the rental segment. In the first quarter of this year, Bayut’s data showed up to 88 per cent increases in advertised rental costs for properties in Dubai. In most cases these price hikes were consequent to either the ever-increasing demand or recent handovers in communities such as Dubai Hills Estate and Downtown Dubai.
John Lyons, Managing Director of Espace Real Estate, who has had a front-row seat to the remarkable transformation and evolution of Dubai's real estate market in the post-pandemic era, says, “As we look back on the past two years, the data speaks for itself – the residential sector, with its plethora of town houses, villas, and apartments, has seen a considerable surge in transaction activity compared to the two-year period immediately preceding the onset of the pandemic.”
However, Lyon says, what truly stands out is the astounding increase in activity within the luxury and ultra-luxury segment, specifically in properties valued above Dh20 million. “In a comparison of the two years before and after the pandemic, there's been a stunning 714 per cent increase in transactions within this premium category. In fact, if we look at the recent history of Dubai's property market, it is clear that the post-pandemic era will be remembered as a turning point. It has been nothing short of a renaissance, a coming of age for Dubai's luxury real estate market, which is now under the global spotlight like never before.”
Even properties in traditionally affordable areas have recorded around 24 per cent increase in advertised rental costs. Search trends on Bayut show that centrally located, established neighbourhoods such as Bur Dubai, Dubai Marina, Business Bay, Umm Suqeim and Jumeirah have been most popular among tenants.
“The early reopening of Dubai during the pandemic, along with an influx of new businesses, change in sponsorship rules, the instigation of the golden visa, job market recovery and increased tourist visits, has collectively contributed to the rising demand for rental properties and subsequent price increases,” explains Porush Jhunjhunwala, CEO of Banke International Properties.
“Even affordable housing areas like Jumeirah Village Circle (JVC), Jumeirah Village Triangle (JVT), Sports City, Liwan, and Discovery Gardens have experienced moderate growth in rent prices. On one side we see end users making lifestyle adjustments to cope with the price rises, however on the plus side we are hopeful of more and more tenants turning to homeowners utilising the flexible payment plans offered by prominent developers.”
Despite the continuous hike in prices, there has been no adverse movement noticed in the demand for properties in these areas. The safety, economic stability, available property options and quality lifestyle that Dubai offers add to its overall charm, making it one of the best cities in the world to live in.
Increase in sales transactions
Bayut saw a similar trend for property sales in Dubai. Data shows that advertised sale prices for ready properties in Dubai have increased by up to 24 per cent. As per the Dubai Land Department, a total of 30,767 sales transactions (ready and off-plan) valued at Dh87.9 billion were recorded between January and March 2023.
Over the course of the past 15 months, there has been a massive influx of foreign investment in the real estate sector. Besides Dubai’s investor-friendly policies, there are a handful of other catalysts, including lucrative rental yields, economic stability and long-term residence visas that have been driving this recent demand for investment properties in the emirate.
“Dubai's flourishing economy has sparked a remarkable surge in families seeking to settle in the city, with relocation rates at their highest in nearly ten years,” says Aaron Lomax, Managing Partner of Treo Homes. “Consequently, the rental market is facing immense strain due to a notable scarcity of available properties across various market segments. This scarcity serves as a promising signal for future property sale values, with a projected lag of two to four years between initial relocation and the decision to purchase a permanent residence in the city. As a result, the demand for first-time buyers entering the market is anticipated to remain strong over the next five years.”
Search trends on Bayut reveal that homebuyers mainly preferred investing in areas like Dubai Marina, Jumeirah Village Circle (JVC), Damac Hills 2, Downtown Dubai and Palm Jumeirah. With most of these areas offering projected ROIs of 5-8 per cent, it’s no surprise that these residential districts appeal more to investors looking for good investment opportunities.
Flourishing off-plan segment
Besides the ready properties, there has been notable movement in the off-plan segment as well. With most developers in Dubai promising reasonable handover timelines alongside flexible payment plans, the off-plan sector in Dubai continues to grow. District 10 in Jumeirah Village Circle, Urban Oasis by Missoni in Business Bay, Villanova in Dubailand and Alaya in Tilal Al Ghaf have been the investment hotbeds for off-plan properties in Dubai during the first quarter.
"With the recent pandemic, people have realised the importance of a healthy and balanced lifestyle and ensuring financial security in a well-managed and growing economy,” says Sunny Bhagnani, Off-Plan Sales Director at Aqua Properties. “This has led to a flourishing off-plan sector as demand has risen for homes that serve as both a permanent residence and relaxing retreat. Consequently, Dubai's newly released luxury waterfront developments have experienced significant upward market trends, offering residents an enviable lifestyle with stunning views of the Arabian Gulf, and fantastic ROI potential. Government initiatives, including long-term residency visas and relaxed ownership regulations, have further motivated expatriates to invest in properties, ensuring a continual boost and stability in the Dubai real estate market.”
Based on the trends seen on Bayut, the performance of the Dubai real estate sector over the past 15 months has been phenomenal. The sector has grown exponentially, with a steady demand fuelling it further to reach greater heights.
