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Dubai’s off-plan sales surge on steep ROI spike

Off-plan investment opportunities in Dubai are now attracting “generational interest” with rental returns recording the steepest increase since 2014, property pundits say.

For investors, the market offers strong rental returns. Average apartment rents in Dubai rose by four per cent over the fourth quarter of 2021, following a broadly stable third quarter — the steepest increase since 2014, according to Chestertons’ Research.

Interestingly, strong return on investment (ROI) is no longer confined to central locations like Downtown Dubai or Dubai Marina and can now be gained in vibrant suburban communities such as Sports City, Jumeirah Village Circle, Arjan, Arabian Ranches, and Al Barsha South, to name a few, the real estate consultancy said.

“Dubai’s reputation as a global business hub, its competitive real estate prices, strong rental returns, and expanded residency options make it ideal for new home buyers,” it said.

Investors can also benefit from highly competitive off-plan real estate prices compared to the rest of the world. For example, the price per square metre in Dubai averages €5,000 versus upwards of €10,000 per square metre in Paris or Sydney.

Moreover, the local off-plan market is going through an encouraging period of growth: Dubai’s off-plan apartment sales totalled Dh11.65 billion across 5,303 transactions in fourth quarter of 2021, up from Dh9.79 billion across 4,905 transactions during the third quarter of last year.

In February, Dubai’s real estate continued its upward trend as the investors and end-users explored best buying options for residential properties on long-term lease, says a latest report. The ValuStrat Price Index (VPI), which reached at 78.1 points — 21.9 per cent lower than the 100-point index base of January 2014, recorded a steady price growth of just over one per cent in February due to demand for residential properties in Dubai. It further noted 2.1 per cent growth in villa values and 0.5 per cent increase in apartment prices last month.

According to Property Finder, since the beginning of the Expo 2020 Dubai, the market has seen 23,739 sales transactions worth Dh63.43 billion. This included 13,120 secondary/ready sales transactions worth Dh41.19 billion and 10,619 off-plan sales transactions worth Dh22.24 billion.

“The unique benefits provided by the local market mean off-plan investment opportunities in Dubai are now attracting generational interest. This can range from first-time buyers who realise it is the ideal way to get on the property ladder instead of being priced out of markets like London, to buyers who are planning their retirements and looking to rent or short-term lease their properties as holiday homes, while still retaining part-time annual use for winter breaks,” said Dennis Chan, Chestertons’ global head of sales.

With the UAE economy projected to achieve sustained economic growth in 2022, and Dubai continuing to grow its reputation as a hub for international business, more and more new home buyers and investors are switching on to the extensive benefits on offer in the emirate’s real estate market, Chestertons said in its report.

Chestertons has recorded a 20 per cent increase in enquiries from overseas for Dubai property in fourth quarter of 2021 and first quarter of 2022. This surge in enquiries has come as no surprise as it is indicative of the current state of the market with Dubai’s off-plan property transactions totalling Dh5.24 billion in January alone.

The real estate consultancy said such insights point to a real estate market that is trending in the right direction, with increasing numbers of local and international investors looking at Dubai as an attractive location to invest in off-plan properties with long-term prospects.

“For first-time and second-home buyers, as well as seasoned investors, Dubai is fast becoming the full package when it comes to ticking three all-important criteria for a worthwhile property investment: ROI, business opportunities and lifestyle benefits.”

Property experts said while many investors previously viewed the region through quite a short-term lens, they are now looking at the Dubai market with a long-term focus. They attribute this to multiple key factors, including an ever-growing, skilled, multi-cultural population, which is benefiting from world-class educational and healthcare amenities, future-focused communities, and a growing economy.

Ata Shobeiry, chief executive officer of Zoom Property, said the positive sentiment in Dubai real estate is a welcoming sign for investors.

“High rental returns, visa reforms and expatriate-friendly policies are some of the biggest attractions for investors as they continue to pour in from all over the world. The competitive property prices in Dubai is another factor that has resulted in the high demand of the both off-plan and ready properties,” Shobeiry told Khaleej Times on Sunday.

“The UAE’s diverse range of residency options, such as golden, freelance and real estate visas, afford the opportunity to live, work, study, and start a business in Dubai, while also attracting more and more of the world’s top talent to the emirate,” according to another industry executive.

In addition to scoring above average in the Safe Cities Index 2021, the UAE has also established itself as a leader for ease of doing business, ranking 16th out of 190 countries (World Bank Data) — strengthened even further by the recent alignment of the country’s working week with global standards.