What is Happening in the Dubai Real Estate Market

For those considering a move to Dubai or real estate investment on the Persian Gulf shore, it's essential to monitor the housing market trends. In this article, we've compiled key data for 2022 to provide you with insights into the property market in Dubai, including popular choices among buyers and the changing housing prices. Please note that this article contains various figures and statistics. 

• Record Year
• Where Did This Property Boom in Dubai Come From
  
• Real Estate Market in Dubai: Facts and Figures
  
• Price Rise for Villas in Dubai
  
• Price Rise for Apartments
  
• What about Rental Prices
  
• What to Expect from the Real Estate Market in 2023

Record Year

From the record-breaking figures, it's evident that the Dubai real estate market in 2022 didn't merely recover after the pandemic slowdown; it soared to new heights. The luxury housing segment set a new seven-year price record, breaking it three times in 2022 alone. Notably, the combined cost of the three most expensive villas on Palm Jumeirah island approached 1.2 billion dirhams (approximately $320,000,000), garnering significant media attention.

The rental market has also witnessed remarkable milestones. The six-month rent for an exceptionally luxurious mansion on Palm Jumeirah reached 4,000,000 AED ($1,090,000), surpassing the 2021 six-month rent of an Emirates Hills villa by 250,000 AED. 

It wasn't only luxurious villas that saw high demand in 2022 – the property market in Dubai expanded across various sectors. According to a year-end report by Property Finder, the total value of sales transactions exceeded 240 billion AED ($65 billion), marking a 61% increase compared to 2021.

Where Did This Property Boom in Dubai Come From 

Experts point to several factors that have contributed to the growth of the property market in the UAE's largest city. Alongside the easing of pandemic-related restrictions, these factors include two major global events: Expo 2020 Dubai and the conclusion of the World Cup, won by the Argentine national team in December 2022 in neighboring Qatar.

Nevertheless, these factors might not have had such a profound impact without a consistent state policy aimed at attracting individuals and investments to the country. The absence of income tax, favorable opportunities for purchasing off-plan property, and the adoption of cutting-edge digital technologies in the economy are enticing prospects for businessmen, investors, and skilled professionals alike.

Furthermore, the Emirates enthusiastically grant long-term resident visas to individuals who can make meaningful contributions to the economy, the country's development, and its international image. These contributions need not be purely financial. The UAE's Golden Visa residency program was initially introduced in 2019, offering visas valid for up to ten years. In 2022 alone, nearly 80,000 expatriates received such visas, and with the recent simplification of the application process in October, we can anticipate a further increase in the number of residents. These residents are likely to engage in renting and buying properties, thereby boosting the real estate market.

Real Estate Market in Dubai: Facts and Figures

What are analysts and real estate agents reporting? In total, there were 88,028 property transactions amounting to 240 billion dirhams. This is a significant increase compared to 2021 when there were 60,258 property transactions. In other words, there were 46% more transactions in 2022 than the previous year and 38% more than in 2013, setting impressive new records.

Almost half of the properties sold are not yet finished houses and apartments. Off-plan real estate deals account for 44% of the market, with a total value in 2022 reaching 83 billion AED ($26.5 billion). This represents more than a third of the total market volume. In 2021, the corresponding figures for unfinished housing were at 40%, with a total value of 44.6 billion AED ($12.15 billion).

When it comes to types of housing, 85% of the purchased units are apartments, while the remaining 15% are private homes including villas and townhouses. Just under a third of the properties belong to the secondary market, while two-thirds are being sold for the first time.

On classified websites for rentals and sales, one- and two-bedroom options account for two-thirds of searches in the "apartments" category. In the "house" category, two-thirds of users were looking for three- and four-bedroom villas and townhouses. The table below highlights the most popular areas in Dubai among potential property buyers.

Price Rise for Villas in Dubai

Property consultancy Knight Frank reached similar conclusions in its quarterly market review: apartments dominate the real estate market, and there is significant demand for expensive villas, which is driving up prices.

The most significant villa price growth has been observed in Dubai's Palm Jumeirah. In the third quarter of 2022, the price per square meter surged to over 37,673 AED ($10,258). This represents an increase of almost 1.5 times compared to the previous year and a 26% increase over the previous record set in 2017. Mohammed bin Rashid City ranks second among Dubai districts, with a price per square meter rising by a quarter or more, reaching 12,490 AED ($3,401).

On average, villa prices in Dubai have surged by 14.3% within a year, with one square meter now costing 14,548 AED ($3,961), coming close to the 2014 record. In the most upscale and exclusive areas of the city, including Palm Jumeirah, Emirates Hills, and Jumeirah Bay Island, prices have skyrocketed by 89% over the past 12 months. In these areas, one square meter now commands around 34,670 AED ($9,440). Experts attribute this increased demand for villas, in part, to the consequences of the pandemic, as many people have considered moving to larger homes.

One more notable factor is that during the first nine months of 2022, 152 real estate properties, each valued at over $10,000,000, found new owners. This also represents a record in the history of Dubai's real estate market.

Price Rise for Apartments

As previously mentioned, apartments in Dubai are more commonly purchased than private homes, and the supply in this segment is notably higher. Consequently, apartment prices have not experienced as rapid a surge as prices for villas and townhouses. Within a year, prices per square meter have increased by approximately 8%, but even with this growth, apartments are still nearly a quarter cheaper than during the record-breaking year of 2014.

In the premium areas, the price growth for apartments is more pronounced. Dubai Hills Estate leads in this category, with the price per square meter surging by 19% in just 12 months, reaching 17,196 AED ($4,682). Prices for apartments in Mohammed bin Rashid City and Palm Jumeirah are also experiencing rapid increases.

In total, during the third quarter of 2022 alone, housing prices in Dubai increased by 2.6%. However, the prices are still significantly lower than the figures from 2014 when one square meter was 22% more expensive.

What about Rental Prices

Rental housing has also seen an increase in prices over the past 12 months, with both villas and apartments becoming 27% more expensive compared to 2021. Palm Jumeirah leads the way with house prices increasing by 44% and apartment prices rising by 40%. A similar price increase is observed in Downtown. The average rental rate in the city by the end of the third quarter of 2022 was 830 AED ($226) per square meter.

What to Expect from the Real Estate Market in 2023

According to Knight Frank, prices in the "common" housing market are expected to have risen by 5-7% by the beginning of 2023, and similar dynamics will likely continue throughout the year. Premium real estate was initially expected to increase in price by about 1.5 times, but in 2023, the pace is likely to slow down to 13.5%. However, it's important to keep in mind that forecasts may not always align with actual outcomes, so analysts cannot be held responsible if certain expectations do not materialize.

In a Nutshell

Apartments and private houses in Dubai are selling rapidly, but supply does not always keep pace with demand, leading to the rise in prices. This was both anticipated and has occurred. However, there is a significant amount of new housing entering the market. Therefore, there is still a wide range of choices available, spanning various price categories, with the possible exception of luxury villas and penthouses, which typically come to the market in limited quantities.

Cover photo: Six Senses Residences (Housearch)