Real estate is a major component of the UAE’s economic diversification plan, with the goal of reducing its dependence on oil and gas. Approximately 5.5 per cent of the country’s gross domestic product is generated by real estate activities. Over the past decade, the UAE real estate industry has become a global player. In 2019, the regional real estate players had a collective brand value of 2.7 billion dollars, ranking third behind China and the United States. For the forecast period of 2022-2027, the UAE residential real estate market is expected to grow by more than 8%.
With assets worth over 43.4 billion U.S. dollars, Abu Dhabi Investment Authority (ADIA) is one of the world’s largest real estate investors. While 8.2 per cent of Dubai’s gross domestic product is generated by the real estate industry. For its foreign workforce, it is also one of the most important employment sectors. The emirate of Dubai over time has become a popular real estate investment destination due to its focus on becoming a high-end tourism destination. In the emirate, almost 72 thousand buildings are investment villas, followed by 40.6 thousand private villas. However, the Luxury real estate in the region was adversely affected by COVID-19.
Since the pandemic, UAE real estate has bounced back stronger attracting significant attention and investments. The emirate’s consistent economic policies, business reforms and extraordinary infrastructure have widely drawn global investors. Both private and corporate investors have shown affinity, especially towards the luxury real estate segment. The sector is expected to further gain momentum in the months to follow.
According to the reports, the emirate has already recorded and attracted more than 43,000 deals amounting to about Dh170 billion in investment within the first seven months of 2022. This marks an 87% increase in the figures in H1’2022 as compared to H1’2021. In particular, the sales transactions recorded in the month of June 2022 were at 8,900, valued at Dh22.75 billion in total. Similarly, Abu Dhabi’s property market recorded 7,474 transactions in H1’2022 worth Dh 22.38 billion.
What’s driving the increase in investments?
There are various factors behind the increasing demand and supply of real estate in the UAE. Especially since the pandemic many rules and regulations have been changed that have attracted not only domestic but also international investors.
Reformed visa rules
One factor that has highly contributed to the growth of the real estate segment in the UAE is the relaxed visa regulations; it has become comparatively easier for investors to invest in real estate and obtain a golden or silver visa. Visa relaxations were implemented to encourage foreign investors and as per statistical data, authorities have well achieved their goal.
A rise in foreign investments
In the UAE, Dubai receives the maximum amount of foreign investments in real estate closely followed by Abu Dhabi. Both residential and commercial properties are fast selling, making the market highly competitive. Friendly policies for investors and expats and a strong global recession resilience are the attracting factors. It has been a good year for luxury properties. 82 ultra-prime property deals were completed in Dubai alone in the first half of the year, setting the stage for a record year. According to statistics, Russia, Ukraine, and the United Kingdom invest heavily in Dubai and Abu Dhabi. Additionally, significant investments have been made in both of these emirates by investors from India, Pakistan, Canada, Italy, and France.
Renewed property advertisements
Recently, the Dubai Land Department issued updated regulations for property advertisements in order to make investing in Dubai safer for everyone. Despite the fact that it’s a step in the right direction, many believe it will negatively impact the real estate market. This initiative, however, is likely to further strengthen the market’s position as a safe place for investors and even consumers. Those interested in the property will get clarity on the features advertised making for genuine queries in property portals and a higher chance of sales conversion.
The expo wave
Dubai set an unprecedented example by successfully hosting Expo 2020 while the entire world was reeling from the effects of the novel Coronavirus. Several other emirates and sectors, as we know, also benefited from the program. Global investors’ confidence in Dubai was reinforced by the successful management of this event. Over six months since the Expo 2020, Dubai continues to benefit from the post-event buzz. The real estate sector is expected to see a boost in the coming months as Expo City welcomes residents and businesses. The city is going to be located in the same spot that hosted Expo 2020 and will focus on the future.
Recent developments & the way ahead
Talking of meatier deals, the UAE-based Alpha Dhabi Holding (ADH) conglomerate acquired an additional stake of 17% in Abu Dhabi’s Aldar Properties (Sublime 2, Sogno 2 and Sogno 3) in January 2022, taking its total stakes in the company to 29.8%.
In November of 2021, Emaar Beachfront developed a luxurious residential development spanning 10 million square feet. A private, gated island with excellent offerings is being constructed on this site as a resort. Premium resort amenities are expected. Restaurants, bars, and cafes line a 1.5-kilometre promenade, along with shopping and playgrounds. Additionally, Dubai Marina is just a short walk away.
According to statistics released by the Dubai Land Department (DLD), the real estate sector in Dubai is back strong, recovering from COVID-19-induced uncertainties. Property analysts predicted an increase of 1.1% and 2.8% in Dubai house prices in 2021 and 2022, respectively.
According to another survey, residential property prices in Dubai are expected to rise modestly over the next two years. On the one hand, this indicates affordability, and on the other, it shows sustainable growth. As leading real estate players to plan newer and modern projects, Dubai now has an enticing climate for property investments. It’s a good sign for UAE’s subsequent regions as far as the overall business environment is concerned.
Authored by Richa
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