How has Dubai's real estate market changed over the past decade?

General trends in the real estate market in the UAE

In recent years, the United Arab Emirates has become an increasingly attractive destination for investors due to its high business returns, stable economic situation and minimization of corruption risks. Dubai, in particular, is considered a real gem for investment, enticing people from all over the world with its opportunities and conditions. In this article, we will look at how the real estate market in this amazing city has transformed over the last decade, exploring its dynamics and changes.

Dubai market in 2023

At this point in 2023, the volume of transactions in the Dubai real estate market has already surpassed the multi-decade highs seen over the past decade. Many experts state that the United Arab Emirates is perceived not only as a great place for a vacation, but also as a tempting option for partial residence or final relocation. An equally important point contributing to the active increase in interest in real estate was the change of legislation in 2020. Continuously rising housing prices, high interest from citizens and stable economic development of the country have made Dubai one of the main locations for investment.

Construction and foreign investors

This increased attention to the market has certainly influenced the activity of construction companies, which continue to build new residential complexes around the clock. It is known that a large percentage of real estate in Dubai belongs to foreign investors, and among the owners of apartments and villas can be found not only wealthy people, but also world celebrities. Therefore, before deciding to purchase real estate, potential clients are strongly advised to thoroughly research the specific features of the local market.

Achievements of the residential real estate market

Dubai's residential real estate market reached a record high in 2022, when more than 74.6 thousand transactions across all housing types were counted for the year. This volume of transactions was 69% higher than in 2013 and 60% higher than the results of previous years. It is noteworthy that after the crisis that affected the market between 2016 and 2019, as well as the effects of the COVID-19 pandemic in 2020, the market has started to boom again. In addition, it should be taken into account that oil prices have a noticeable impact on the real estate market in Dubai. Their significant drop in 2015-2016 had a negative impact on the sector.

Migration processes and their impact

With increasing mobility on a global level, the real estate market in Dubai continues to gain momentum. According to the Dubai Statistics Center, from 2020 to 2022, 92% of the country's population will be migrants, while only 8% will be UAE nationals. In the first half of 2023, more than 50 thousand real estate transactions were recorded, which already exceeds the annual figures of the last ten years.

Peculiarities of Dubai real estate market

Some of the key distinguishing features of the Dubai real estate market include:

• High openness:market attracts international investors.
• Significant transaction volumes:the market is actively developing and renewing.
• Clear organizational structure:the existing demand for prestigious properties is steadily increasing.

Thus, Dubai continues to be at the forefront of global investment trends, attracting attention for both personal residence and lucrative economic investments.

Overview of the real estate market in Dubai

In the first half of 2023, real estate sales in Dubai reached a volume of 6831.1 thousand square meters, which provided a cash turnover of $28,678.7 million. This figure is as much as 70% higher than the results for the same period in 2022. Nevertheless, 2022 remains a record year in terms of transactions and investment volume over the last ten years. 2021 saw a marked increase in cash flow, which totaled more than $22,673.7 million.

Reasons for the growing interest in Dubai

The demand for buying real estate in Dubai continues to grow, which is largely due to:

• Improvements in social infrastructure.
• Development of the transportation system.
• By actively investing in commercial real estate.

Analyzing the dynamics of the market by condition of objects, it can be noted that since 2013 there has been a steady decline in the number of transactions with ready-made objects. Over the last ten years, buyers have started to favor housing under construction, which is strongly influenced by the increased construction activity. The level of vacant space remains extremely low and in 2022 and 2023, 54% and 57% of all sales transactions were for properties under construction.

Trends in the secondary market

Apartments are more affordable on the secondary market. In the first half of 2023, there were 42,394 transactions with apartments, which is 85% of all transactions on the real estate market. The most popular among buyers were:

• One-bedroom apartments- 43% of all transactions.
• Two-bedroom apartments- 27% of the total number of transactions.
• Studios- 18% of the deals.

This trend has been observed over the last ten years, confirming the preferences of buyers.

Price analysis

If we analyze prices, we can see that apartments on the secondary market provide a noticeable cost advantage over new buildings. Between 2013 and 2018, secondary apartments were on average 15% cheaper. From 2019 onwards, this difference has increased to 40%.

The second quarter of 2023 provided many interesting insights into the real estate market. Among the most attractive new projects several objects stand out.

Major projects on the real estate market

• Seapoint - price $12,870 per square meter and 366 transactions;
• Bluewaters Bay - $11,140 per square meter and 262 transactions;
• Damac Bay - also $11,140 per square meter, but with the highest number of transactions at 661.

The average cost of built properties amounted to $3,490 per square meter, which is 5% higher compared to the first quarter of 2023. If we analyze the dynamics since 2021, we can see a steady increase in prices on the market: in 2020, an increase of 18% was registered, and in 2022 - another 18%. It is important to note that in 2019, the minimum price per square meter was $2,360, when there was a drop of 16%.

Deals with villas in Dubai

Statistics show that one in seven transactions in Dubai involves the purchase of a villa. At the end of the first six months of 2023, there were 7,641 villa and townhouse transactions in this segment, representing 15% of the total number of transactions. Three- and four-bedroom properties remain particularly popular, covering 41% and 26% of villa transactions respectively. Buyer preferences in this area have remained unchanged over the past ten years.

Historical data on villa transactions

If we look at the history of transactions with villas under construction, we can see that in the first three quarters of 2013, the number of such transactions was very low, ranging from 8 to 62 transactions, with an average price 4% lower than the price of ready-made properties. However, in 2015, these figures leveled off, and from 2016 villas under construction started to generate higher incomes for owners compared to finished houses. The biggest gap between prices was observed between 2019 and 2021 - averaging 44%.

Comparison of housing prices

Compared to the first quarter of 2023, the price of villas under construction remained at $3,440 per square meter. At the same time, the segment of ready real estate increased by 4%, reaching $2,490 per square meter. The beginning of the recovery in apartment and villa prices can be traced back to 2020, a consequence of the easing of coronavirus restrictions. While other popular tourist destinations closed down, Dubai opened up international air service. In November 2022, the United Arab Emirates lifted all coronavirus-related travel restrictions in the country.

Expo 2020 and its impact on the market

Expo 2020, which attracted more than 20 million tourists from around the world, also played an important role in the growth of interest in Dubai, making the city even more attractive for investment.

Popular areas for investment in 2023

• Al Barsha South Fourth - 5,866 transactions with an average price of $3,070 per square meter;
• Marsa Dubai - 4,823 transactions with a price of $7,670 per square meter;
• Business Bay - 3,512 deals at an average price of $5,380 per square meter.

Over the past ten years, about 80% of transactions have been done with buyers' own funds, while the remaining 20% are mortgages.

Conclusion

To conclude my analysis of the Dubai real estate market, I would like to emphasize that this dynamic sector continues to attract investors with its unique combination of factors contributing to stable growth. High yields, lack of corruption and attractive business conditions are attracting the attention of not only local but also international buyers. I have seen more and more people looking at Dubai not only as a short-term vacation destination, but also as a very real possibility for permanent residency or secondary residency.

Market trends

Trends in recent years show that the real estate market is actively recovering from crises, and even pandemics. The data on the record number of concluded transactions only confirms this. At the same time, it is worth noting that demand for housing under construction remains high, while the secondary market also provides attractive offers, especially for those looking for more affordable options.

Prospects for development

As an author, I am convinced that there is not only high competition among developers, but also serious opportunities for those who want to be part of this exciting process. Infrastructure development, new commercial projects and continued investment in social programs ensure Dubai's sustainability as an international investment hub.

Main findings

• Active market growth:Dubai has recovered from the crises and pandemic, making it attractive to investors.
• High demand:Demand for housing under construction remains strong, while the secondary market offers affordable options.
• Developed infrastructure:Investments in social programs and commercial projects support economic stability.

Final thoughts

Time will show how the real estate market will develop further. However, today we can see that interest in this city remains and may even increase in the future. I hope that this analytical material has helped you to better understand the features of the real estate market in Dubai and will give you some guidelines for making decisions about investment. However, progress requires careful analysis and a comprehensive approach, because every investment requires a balanced choice and attention to detail.