How has the real estate market in Dubai changed over the past 20 years?

The growth of the real estate market in Dubai

Over the past two decades, the real estate market in Dubai has experienced two significant phases of rapid growth, each ending with sharp declines. From 2002 to 2008, the city became one of the fastest-growing in the world, and property prices quadrupled.

In March 2006, a law was passed allowing foreigners to purchase real estate, which contributed to a surge in foreign investment and the implementation of ambitious projects in this wealthy emirate. As a result, billions of dollars flowed into the market, aimed at carrying out major initiatives such as:

• Jumeirah Garden City
• Dubailand
• The Lagoons
• Palm Jumeirah
• The World

More than 20% of all buyers were Europeans, including Russians.

The impact of the global economic crisis

Nevertheless, by the end of 2008, the world faced a global economic crisis, which led to a significant decline in real estate transaction volumes. About half of the construction projects in the UAE, valued at around 1.1 trillion dirhams (approximately 300 billion US dollars), were either suspended or completely canceled.

However, over time, with the recovery of the economy, the process on previously frozen projects was resumed.

The situation in the market since 2012

At the end of 2011 and throughout 2012, there was a steady increase in housing prices in Dubai, reaching an average of21.5%per year. However, by the end of 2014, this growth slowed down, which led to a decrease in market activity.

Statistical data shows that in 2015, the residential property price index (RPPI) decreased by:

• 11%in 2015
• 3.9%in 2017
• 8.6%in 2018
• 6%in 2019
• 7.1%in 2020

Market recovery since 2021

The situation in the market changed significantly in 2021 when the recovery of housing prices began. This was due to the fact that the UAE government did not impose strict restrictions during the COVID-19 pandemic. Borders remained open, and only mandatory measures such as testing and mask-wearing were implemented.

As a result, in 2021, the prices of apartments and villas in Dubai increased on average.9.25%In 2022, the rise in prices continued.+9.53%).

According to the Dubai Media Office, in 2022, the volume of registered transactions in the emirate's real estate market increased by44.7%compared to the previous year. The total amount of transactions reached a record high.528 billion dirhams($143.8 billion), which is76.5%above the level of 2021.

Increasing interest in luxury real estate

In the past year, interest in the real estate market in Dubai, especially in the premium segment, has significantly increased. Foreign buyers have shown activity both in terms of relocation and in the context of capital investments.

The main buyers in the market turned out to be:

• Russians
• Citizens of the United Kingdom
• India
• Germany
• France

Additionally, an important factor that has influenced the market is the adoption of a new legislative act that simplifies the process of obtaining residency visas for foreign citizens.

Changes in the rules for investing in real estate in the UAE

Recent changes in the legislation of the United Arab Emirates regarding real estate investments open up new opportunities for foreign citizens seeking to obtain long-term visas. In particular, the minimum investment amount for obtaining a 10-year "golden visa" has been reduced to 2 million UAE dirhams, which is approximately 545,000 US dollars.

Additionally, the innovations allow for investment in properties under construction, which significantly increases the availability of housing for those interested. For those aiming for a 2-year visa, the minimum threshold has also changed and now stands at 750,000 UAE dirhams (approximately 204,000 USD).

In addition to everything, programs aimed at attracting professionals to various fields have been significantly expanded.

Dubai as an international hub for wealthy individuals

Dubai is becoming an increasingly attractive place for wealthy people from around the world due to its high quality of life, despite the extreme climate conditions. In a report released by the global network Internations in 2022, the United Arab Emirates ranked sixth among the best countries for expats to live and work. This is a significant improvement compared to the previous year, when the country rose 12 positions.

When choosing a place to live, the following factors are important:

• Safety
• Quality of education
• Healthcare
• Infrastructure development
• Tax policy

Special attention should be paid to the tax aspects. The UAE has no income tax, and the new corporate tax introduced in May 2023 is one of the lowest in the world—only 9%.

Real Estate Market Trends in2023

Since the beginning of 2023, the real estate market has seen a steady increase in prices and a rise in the number of sales. However, there are still questions about how stable these trends are and whether the current prices are justified. What does the real estate market in Dubai look like today? What can be said about the first months of the new year?

Valery Tumin, head of the CIS markets at fäm Properties, noted that the real estate market in Dubai has been showing consistent growth since 2021, with each quarter achieving increasingly higher results compared to previous periods.

Records of the first quarter of 2023

According to Dxb Interact data, the first quarter of 2023 was historic for the Dubai real estate market since its inception in 2014, both in terms of the number of transactions and the total sales volume. The total value of all completed transactions amounted to 88.7 billion UAE dirhams.

Some experts express concerns that demand for real estate may decrease during the summer season due to rising temperatures. However, an analysis of last year's data shows that these concerns are unfounded. A comparison of Dubai three years ago and now provides a clear picture that these are two completely different cities, especially in terms of economic development and the state of the real estate market.

How do various factors influence the real estate market?

Elena Timchenko, managing partner of Royal Home Real Estate, emphasizes that the Dubai government places a high priority on protecting the interests of investors. Over the years, various legislative changes have been introduced to prevent manipulations that could negatively impact investor satisfaction. Transparency of procedures, simplicity, and speed of real estate transactions are some of the most notable advantages that set Dubai apart from other megacities. Investors in this rapidly growing region have access to a wide range of opportunities while remaining under the protection of government structures.

Government adaptability

It is also worth noting the adaptability of the UAE government in matters of international relations and its commitment to forming and developing new partnerships. The establishment of diplomatic ties with Israel and the restoration of dialogue with Qatar are indicators of this rapprochement. These wise steps contribute to significant economic development and an increase in population, of which more than 80% are foreigners. This, in turn, leads to an increased demand for housing across various price categories.

Data availability

Valery Tumin notes thatdata availability— this is one of the most important factors that influence the development of connections in the real estate market. An important tool in this process is the dxb interact platform, developed in collaboration with the Dubai Land Department. This resource provides up-to-date information in real time, allowing investors, even if they have not visited Dubai, to conduct a detailed analysis of the situation.

Protection of the rights of the parties

The protection of the rights of all parties involved in transactions is also of great importance. When conducting operations in the secondary market, the following is usedelectronic contractwhich is sent to the email addresses of all participants from the land department. After signing this contract, both the seller and the buyer can be confident that their rights are protected.

• The seller does not have the right to sell the property to another person without an agreed contract.
• The land department will not allow any transaction without its approval.
• The change in property value is impossible, as this information was fixed in advance.

On the other hand, the buyer faces certain limitations that prevent him from rejecting the deal without hesitation. If he decides to go through with it, he will lose 10% of the deposit, which will be given to the seller. In the event that the seller refuses to finalize the deals, he will face serious penalties, making such a step extremely disadvantageous for him.

Problems with real estate transactions

During a real estate transaction, the buyer may encounter various risks, among which is the requirement to pay 10% of the total amount as a penalty deposit. This is not the only issue, as the ability to sell property in Dubai may be at risk due to a freeze from the land department, which can last up to a year.

Prospects of the Dubai real estate market

What is your opinion on the prospects of the Dubai real estate market? Do you believe it will continue to grow? What factors could support its growth?

Dynamics and growth of the market

According to expert Valery Tumyn, the modern real estate market in Dubai is showing steady growth that cannot be considered coincidental. This growth is fueled by active mechanisms aimed at attracting foreign investments. Major companies, as well as both experienced investors and newcomers, are moving to Dubai. All of them wish to find new horizons for diversifying their assets and protecting their capital from inflation, economic downturns, and prolonged stagnation.

Attractive conditions for investors

Dubai is creating very attractive conditions for those who want to invest in real estate. The market offers a wide range of properties:

• affordable housing;
• expensive elite housing with high investment potential;

Special attention should be paid to the possibility of interest-free installment plans, which significantly ease the purchasing process. Foreign citizens can not only buyreal estate but also take advantage of various beneficial offers and preferences.

Real estate market risks in 2023

Nevertheless, what are the main risks that may await the real estate market in Dubai in 2023? In this regard, Valery Tumin highlights the cyclicality of the market: periods of significant growth are always followed by a subsequent decline and vice versa. Currently, Dubai has entered the third phase of active growth since the beginning of the 21st century, which occurred after the previous surges and corrections recorded in 2009 and 2015.

Last year, the market showed a price increase of around 16-19%, although it is still below the levels of 2014.

It should be noted that a detailed study of the contractor's history and checking their reputation are extremely important steps before signing any agreement. This will help avoid potential issues in the future.

In addition, it is important to pay attention to asset diversity. A smart allocation of finances in your investment portfolio will help reduce risks and increase overall returns.

Current segments of the real estate market

Regarding the current situation, which real estate sectors seem to be the most profitable for investments today? Not just the luxury segment that was relevant in 2022?

According to Elena Timchenko, luxury real estate is currently generating significant interest among investors. The demand for such properties is so high that supply is struggling to keep up. As a result, there is a shortage of available properties that meet the high standards of discerning clients, who are actively seeking new housing opportunities.

Business-class real estate

Business-class real estate continues to be in demand, especially in the rental segment, as it is rented by highly qualified professionals, representatives of the so-called "white-collar" workers.

Moreover, housing intended for renting to the middle class continues to be attractive to investors. However, it is important to consider that such properties are more suitable for long-term investments. Buyers interested in this segment can expect stable rental income over an extended period.

Trends for 2023

According to Valery Tumyn, the main trend of 2023 can be described as the expansion of the ultra-luxury real estate market. Currently, there is a shortage of offerings that can meet the demands of discerning clients. This is linked to the growing interest from foreign investors and the migration of wealthy individuals.

Potential buyers are facing a limited selection, which contributes to a consistently high demand for premium properties. It should be emphasized that over the past year, prices for luxury housing in Dubai have increased by an impressive 89%. We do not anticipate that this trend in the luxury real estate segment will change in the near future.

Affordable housing

Next, it is important to highlight the market for affordable housing, priced up to $350,000. There is a high demand in this segment: as soon as a suitable offer appears, it quickly finds its buyer.

However, it is worth noting that the number of offers in this segment is significantly lower than the number of requests. Nevertheless, to successfully purchase an affordable apartment, it is important to consider various details to avoid potential disappointments later on:

• It is important to pay attention to the floor.
• consider a view that won't be obstructed by neighboring buildings;
• to pay attention to other important aspects.

There are also rare offers worth looking for, as they can feature attractive prices, and most importantly, such apartments pay off quickly, making them interesting for investors.

Promising areas for investment in Dubai

The question about the most promising areas and locations in Dubai interests many people, and comparisons of different zones highlight several key directions. Valery Tumin notes that JVC (Jumeirah Village Circle) is one of the rapidly developing areas that attracts its residents with a secluded atmosphere and comfort. This place is ideal for families looking for a calm and comfortable place to live.

Luxury real estate on Palm Jumeirah

When considering the luxury real estate segment, it's worth paying attention to Palm Jumeirah — an artificial island designed in the shape of a palm tree, which has become a symbol of a luxurious lifestyle. This region attracts wealthy tenants and buyers looking to acquire secluded homes right by the sea.

The appeal of Dubai Marina and Dubai Harbour

Additionally, one cannot forget about Dubai Marina, which, combined with Dubai Harbour, offers residents a magnificent beach and a wide range of entertainment options. This area is popular among both tourists and investors due to its convenient location and the variety of available services. The tall skyscrapers, yacht docks, shops, and numerous restaurants create a unique atmosphere. Dubai Harbour is currently undergoing active development, indicating a potential increase in prices in the coming years.

Prospects of Creek Harbour

Elena Timchenko draws attention to Creek Harbour, which initially remained in the shadows among investors for a long time. However, its growth prospects remain significant, and keeping an eye on the development of this project would be a wise move.

Interesting projects in Maritime City and Healthcare City 2

She also emphasizes the importance of places like Maritime City and Healthcare City 2, where construction of residences by renowned brands such as Ritz-Carlton and Kempinski has already begun. New projects in these areas appear particularly attractive to investors, as favorable conditions for market participation are often offered during the initial stages of their implementation.

Tips for beginner investors

It should be noted that the success of any investment depends not only on the project itself but also on the amount of investment and the goals set. Beginners in this field should focus on creating a diversified portfolio that includes different projects, rather than trying to concentrate on one segment.

• Create a diversified portfolio.
• Participate in large construction projects to ensure reliability.
• Keep an eye on new promising areas.

For those who are just starting their investments, it would be beneficial to consider participating in projects carried out by large construction companies, as this will provide a certain level of reliability and stability.

Listen to the professional

Despite the increase in the number of new small developers who can offer competitive quality and attractive construction completion times, it is important to have a reliable realtor. Such a professional is not only focused on selling real estate but is also capable of providing a wide range of services after the transaction, including rental and property management. Typically, these companies pay great attention to the formation of their catalog, which is a significant competitive advantage for them.

Individual approach to each client

As Valery Tumin notes, choosing an apartment based on the popularity of the developer and the novelty of projects is not an optimal strategy. We recommend that clients focus not on well-known brands, but on their individual needs, as each buyer has their own unique goals.

• Acquisition of housing for personal residence
• Real estate investments
• Plans for resale
• Receiving rental income

Only a combination of deep analysis and specific requests from a particular client can lead to finding the right option.

New opportunities in Dubai

New residential projects are actively emerging in Dubai, work continues in sought-after areas, and new residential complexes are being developed, each targeting its own audience. The real estate market in Dubai is constantly changing, yet its appeal remains highly valued. Analytical research and expertise in offers play a key role in finding profitable properties or comfortable housing.

Market prospects

The real estate market in Dubai is steadily developing under the influence of both internal and external factors, and it does not currently appear to be overvalued. It still has significant growth potential, especially considering the ongoing increase in foreign capital. After the borders reopened, investors from China are actively entering the market, and their opportunities have not yet been fully realized.

Population growth

The number of residents in the emirate is rapidly increasing due to migration, which is also leading to a rise in demand for housing and an increase in prices for apartments and villas. For example, as of April 2023, the population of Dubai exceeded 3.5 million people, and according to government forecasts, it is expected to grow to 5.8 million by 2040.

Prices for luxury housing

Moreover, one of the most significant arguments in favor of an optimistic view of the Dubai market is that prices for premium housing are still significantly lower than in other major cities around the world. In particular, they are seven times lower than in Hong Kong and 5.5 times lower than in London. At the same time, the quality of properties and the overall standard of living in the United Arab Emirates often exceed similar indicators in the capital of the United Kingdom, which creates opportunities for comparison.

Conclusion

In conclusion, when looking at the dynamics of the housing market in Dubai over the past two decades, one cannot help but notice how much it has been subject to fluctuations and the influence of global economic factors. We have witnessed both rises and falls, but each time the market has recovered, adapting to new realities.

Understanding these changes and the reasons behind them allows us not only to assess how far Dubai has come but also to glimpse into the future.

Optimism about the future

With the current trends in rising demand, especially from foreign investors, and the adoption of new laws aimed at improving the investment climate, I feel...optimismRegarding the further development of this region. However, despite the positive forecasts, it is important to remember the need for a sensible approach to investments.

Risks and opportunities

Experience from the past shows that even in the most vibrant markets, unexpected problems can arise. Therefore, if you are considering the possibility:

• invest in housing in Dubai
• or are you just planning to move?

I strongly recommend conducting a thorough analysis and consulting with professionals. Despite all the successes, remember the risks inherent in any rapidly changing market.

The future of Dubai

One thing is clear: Dubai has confirmed its reputation as a financial and housing hub. It has every chance of continuing to attract the attention of investors from around the world.

Time will tell how sustainable this growth will be, but the future looks promising for the emirate, which continues to amaze and showcase incredible opportunities for living and doing business.