Residential property prices growth in the UAE will continue in 2022, but at a slower pace despite a strong supply of new units is expected to come online in Dubai and Abu Dhabi.
According to real estate consultancy Asteco, the UAE will see a supply of 38,500 apartments and 3,800 villas, almost similar to the previous years. Dubai will account for a large chunk of it with 30,000 flats and 3,500 villas this year. Similar to the previous year, some of this is expected to be delayed or will eventually spill over into next year.
In Abu Dhabi, around 2,000 residential units are likely to be handed over in Reem Island, 2,000 each in Al Raha Beach and Yas Island and 1,200 in Saadiyat Island.
“We will continue to see new project launches (in Dubai) from master and third party developers with construction-linked and post-completion payment plans,” Asteco said in its annual report released on Thursday.
The consultancy expects several new project announcements are expected in 2022 in the UAE capital because a number of developments that were previously put on hold are expected to restart.
“In 2022, many master plan communities in Sharjah and Ras Al Khaimah are likely to see significant additional supply. In Al Ain, a smaller number of buildings located in Town Centre, are expected for handover as well as some private villas spread across different areas of Al Ain,” said HP Aengaar, CEO at Asteco.
Property sales, prices
The property market began the year on a very high note as Dubai recorded 5,797 sales transactions worth Dh16.69 billion last month. It was the best January ever on record, according to Property Finder.
In January 2022, more than half – 53 per cent – of all transactions were for secondary/ready properties and 47 per cent were for off-plan properties. The off-plan market transacted 2,706 properties worth a total of Dh5.32 billion while the ready market transacted 3,091 transactions worth Dh11.37 billion.
“It looks like 2022 will continue on an upward trajectory when it comes to sales volumes and price increase in prime, popular areas. New supply will be low in prime areas and certain asset classes, such as villa/townhouses, therefore we can continue to expect price increases in these areas as demand continues to be strong,” said Lynnette Sacchetto, Director of Research and Data at Property Finder.
Off-plan in high demand
“The off-plan segment will most likely not cool down anytime soon due to investor sentiment, attractive pricing, the lure of Dubai and overall good projects launching in the market,” Sacchetto added.
Comparing it to January last year, the rebound seen in the off-plan market in January 2022 has been significant as off-plan sales transaction value increased by 307.88 per cent and volume increased by 183.05 per cent year-on-year.
Ata Shobeiry, CEO at Zoom Property, said 2021 ended on a strong note and 2022 started on the same pattern, which is evident from the staggering numbers the market produced in January.
“The significant increase in the sales volume of off-plan properties shows that buyers and investors feel confident about the market. They believe that the market will produce substantial returns for them,” Shobeiry told Khaleej Times on Thursday.
Haider Tuaima, head of Real Estate Research, at ValuStrat, said almost half of all off-plan sales were transacted during 2021 in Business Bay, Dubai Harbour, Jumeirah Village, Jumeirah Lake Towers and Sobha Hartland.
Tuaima noted that all the above-mentioned areas are expected to continue the high off-plan sales volume momentum in addition to Downtown Dubai, Dubai Hills Estate, Al Jadaf, Dubai Creek Harbour and Arjan.
According to Asteco, sale price growth in Dubai is likely to continue but ease in 2022, in line with increased supply and new project launches. Villas will continue to be the predominant focus of demand and the limited number of new handovers in quality communities should translate into higher sales prices.
In Abu Dhabi, the villa sales market is expected to remain relatively active because investors will continue to be more sensitive to the price point of units.