In January 2023, Dubai recorded over 9,800 real estate transactions, an increase of 128.5% compared to January of the previous year. The total value of transactions was AED 28 billion ($7.6billion), which was an incredible 178% higher year-on-year. The market, which had seen an uplift with East European buyers coming in over the summer and the hype around the FIFA World Cup hosted in Doha (less than an hour’s flight from the city), was expected to take a dip as the effect of rising interest rates took hold. But it seems to have defied the odds, as Dubai has been doing the past few years. While global economies have been in a sort of flux, especially in the real estate sector, Dubai continues to post record numbers.
By comparison, the New York market went into a slight decline toward the end of last year and coming into 2023, with prime apartment sales in Manhattan dropping by 50% in January. London is seeing a slowdown in sales and rental rates, with house prices steadily dropping as well. Part of the reason for the drops in both markets is the rise in interest and mortgage rates, which has reduced the spending power of homebuyers. The same trend was expected in Dubai as well, but the city has managed to defy the norm and continue a hot streak in terms of real estate performance. While there has been a slight dip in mortgage buyers, particularly at the lower end of the prime market where a slight change in the buying threshold can have a significant impact, there is a healthy volume of cash buyers who are able to cover that gap. Cash buyers have been largely responsible for growth in the market, especially in the higher end communities such as Palm Jumeirah, Dubai Hills Estate and Jumeirah Bay Island.
“Due to strategically devised government initiatives and legislative changes, Dubai has positioned itself as the true centre of the world,” according to Mark Richards, Managing Director of luxury brokerage LuxuryProperty.com.” It is a lifestyle destination with world-famous attractions such as the Burj Khalifa, Palm islands, the Ain Dubai Ferris wheel, and many others. But more than that, Dubai has been building itself up as a place to call home – the introduction of long-term visas, and the coveted ‘Golden Visa’, was particularly significant as it gave homebuyers the security of knowing that they could reside in the city for the long haul.”
Consequently, many communities in Dubai are seeing a longer period of stay from its residents, which is one of the factors that has contributed to low supply in the face of high demand. Essentially, a lot of new people want to move to Dubai now, while older residents are reluctant to leave. As of October 2022, it was reported that there were 67,900 high-net-worth individuals (HNWIs) living in Dubai – an 18% increase from the previous year. With a continued influx of HNWIs and increased demand for prime and super prime properties, it’s hardly a surprise that the city’s real estate market is continuing to smash records.
Can this level of growth be sustained throughout 2023? With demand routinely exceeding supply, it’s expected that property prices to go up though transaction numbers may see a slight reduction. Mortgage registrations are likely to go down as well, but activity from cash buyers should remain quite healthy throughout the year. It just remains to be seen what new records are set and broken.
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