How does Dubai manage its real estate boom?

The queues for purchasing luxury housing indicate the strength of interest in the post-pandemic era, but cautious steps to manage this growing sector are also welcomed.

If anyone was looking for a tangible sign of the recovery of the Dubai real estate market after Covid-19, the images published this week of people lining up in the middle of the night to buy luxury homes on Palm Jebel Ali should serve as sufficient evidence that the market is thriving.

The power of interest in the post-pandemic era

Speaking to National, Matthew Solomon, a sales manager at the real estateagency Haus & Haus, said that investors have been lining up since 3 a.m. on Wednesday. "The demand for this kind of luxury property continues to grow," he said. "The fact that the launch can cause such a frenzy indicates that the demand is still very high."

Such sales indicate the strength of interest and momentum in the post-pandemic era. In August, the residential real estate market of the emirate demonstrated strong growth, with total sales increasing by 37 percent compared to last year, reaching 31.2 billion dirhams ($8.5 billion). Sales were parallel to the ongoing rise in rental prices for housing. According to data published in 2022 in a report by the real estateagency Betterhomes, rental prices for apartments in several areas of Dubai, such as Downtown Dubai, Business Bay, Dubai Marina, and Jumeirah Lakes Towers, increased by 20-22 percent. Villa prices also rose by 56 percent over the year, averaging 428,019 dirhams ($116,500).

Growth and planned development

There are no signs that demand will weaken in the near future.

Regulation and balance

Of course, rising real estate prices are not unequivocally good news for everyone, and many people with more modest incomes need good and affordable housing. Moreover, not everyone views real estate as an investment asset for buying and selling - most people simply want to have their own home.

The authorities recognize this need and are working on careful regulation. In 2019, a supreme real estate committee was established in Dubai, headed by the first deputy ruler Sheikh Maktoum bin Mohammed, who is also the vice prime minister and minister of finance, along with senior construction companies, to find a balance between supply and demand in the sector. In April of this year, Sheikh Hamdan bin Mohammed, the Crown Prince of Dubai, announced an international competition for the best project of a "highly economical, expandable, innovative, and aesthetically pleasing home," for which families could obtain a mortgage of 1 million dirhams.

Sustainability and development

Government incentives for foreign investors and active promotion of tourism pay off for a country experiencing population growth. However, the diverse experiences of construction booms around the world highlight the importance of cautious measures to regulate this growing sector, as implemented by the UAE. Sustainable growth, ambitious projects, as well as the provision of housing and good regulations are very encouraging.