UAE's property market has grown substantially over the years, with the real estate industry now a major contributor to the city's rapid growth and development. The steps taken by the government to attract foreign investment in the sector have also contributed to the steady growth seen by the property market. In addition, UAE's unique combination of modern infrastructure, tax incentives, and its position as a hub for international business and tourism have made it an attractive location for real estate investment.
In terms of high points, the UAE residential property market has seen a lot of growth in recent years. This is due to a number of factors, including the growth of the local economy, an increase in the number of expatriates living in the UAE, and a rise in real estate investment.
Dubai, in particular, is a very attractive market for high-end and ultra-luxury residential properties, as it is known for its luxurious lifestyle and a large number of expatriates. In the fourth quarter of 2022, the prime villa sub-market surpassed the price peaks of 2014 for the first time, with the prices for luxury villas growing by 19.4% annually to achieve 116 points as the ValuStrat Price Index for prime properties, which is 1% above the 10-year peak. The annual capital gains for prime apartments were lower compared to those of villa counterparts, reaching an increase of 11.3% and an index of 81.5 points. Despite this increase, the capital values of apartments remain 18.5% lower compared to the 100-point base of 2014.
Consequently, Dubai is predicted to be the leading hub for ultra-luxury residential properties by 2023, with prestigious areas such as Emirates Hills, Palm Jumeirah, and Dubai Marina attracting high-net-worth individuals. The demand for high-end properties in these areas is anticipated to surge as the economy improves and the population of wealthy individuals expands.
"Dubai's property market is expected to see an average increase of 7%-10% in prices by the end of 2023. This growth will primarily be driven by the prime market and villas. In contrast, other parts of Dubai's residential market may experience stabilisation or even a downward trend in areas where oversupply is expected." Said Haider Tuaima, Director & Head of Real Estate Research.
On the other hand, residential rents are predicted to continue to rise towards the end of 2023, at which point stabilisation is forecasted.
Capital values for apartments in Abu Dhabi are expected to steady during the year while villa communities are expected to see small increments. Whilst rental trends in the capital are unlikely to change significantly during the year.
The most sought-after neighbourhoods in Abu Dhabi include Yas Island, Saadiyat Island and Al Reem Island.
Abu Dhabi and Dubai both witnessed a record number of projects launched, providing prospective buyers with competitive payment plans for off-plan properties rather than mortgage options with record-high interest rates; this may put downward pressure on ready, secondary market properties as well.
Overall, the UAE residential property market is expected to have a positive outlook in the short term, focusing on affordability, investment opportunities, and luxury properties. Therefore, it is important for potential buyers and investors to keep an eye on these trends and markets to make informed decisions. Furthermore, the UAE residential property market is a dynamic and thriving market that is constantly evolving.
For a detailed perspective on the property market, visit: Dubai - VPI Residential Capital Values - March 2023