As of 2023, the UAE real estate market has continued to experience a significant boom in property prices. The country is currently witnessing increased demand for properties in Dubai and Abu Dhabi, and prices are increasing as well.
The above phenomenon is not a fluke. There are definitive factors contributing to this boom.
Firstly, the UAE remains a popular investment destination due to its stable economy and favourable tax policies. This has increased property demands. The Kingdom’s government is also known for being proactive, when it comes to taking policy decisions positively catering to the investors’ needs. In short, UAE ranks high when it comes to ease of doing business.
Another factor driving the property market boom is the population increase in the country.
As per a report from the Gulf News, Dubai’s population officially hit the 3.55 million mark in 2022, with more expatriates making the emirate their second home. To deal with this, several new residential projects have been launched. The prominent ones are Dubai Ritz-Carlton Residences, Mama Residences Dubai, Safa One and Safa Two Towers, Cavalli Couture, and a new USD 5.4 billion community by Azizi Developments.
According to Zoom Property Insights, the annual property transactions in this part of the world, for the first time, crossed the half-a-trillion dirhams mark in 2022. After a whopping 76.5% increase compared to 2021, the total value of transactions in 2022 reached AED 528 billion. The average rent also witnessed an increase of nearly 27% in 2022, with villas and apartments recording a growth of 27.1% and 24.9%, respectively.
With rising demand due to the population increase, these figures will increase in 2023 and beyond, according to Zoom Property Insights.
Furthermore, the Kingdom’s thriving tourism industry has also been contributing to the surge. The country has become a popular tourist destination, increasing demand for rental properties, especially in major tourist cities such as Dubai.
Dubai Marina, Jumeirah Beach Residence, Bluewaters, Beachfront, Palm Jumeirah and Port de la Mer are expected to become the sought-after investment destinations, as per analysts, leading executives and industry stakeholders, who believe that tourism, visa reforms and labour reforms will drive investments in the UAE’s property market.
The UAE property market remains attractive to investors due to the high rental yields and the potential for capital appreciation. As the country moves aggressively towards economic diversification, the property market has been one of the flag bearers of this goal from the non-oil sector.
As per a Zawya report, a 10% price growth is expected in the Kingdom’s real estate sector in 2023 due to strong demand in the luxury sector as high net worth individuals, with millionaires, are now moving to Dubai because of the latter’s stable economy, successful strategy to contain the Covid and erecting excellent infrastructure.
The ongoing Ukraine war has significantly impacted the global economy, including Dubai’s real estate market. There has been an influx of Ukrainian and Russian investors and expatriates in Dubai’s property market, which has in turn driven up demand and property rates.
Additionally, the war has significantly depreciated the Ukrainian currency, the hryvnia. Ukrainians and Russians are now seeking to invest in foreign currencies, including the US dollar, which is widely accepted in Dubai’s property market. This has further increased the demand for properties in Dubai, leading to a surge in property rates.
Moreover, the UAE’s close ties with Russia have also increased Dubai’s property rates. As a result, expatriates with close ties to Moscow have been seeking to move their assets out of the war-torn region and invest in Dubai’s property market.
Cryptocurrency has also emerged as a significant factor contributing to the property boom in Dubai. Dubai authorities are now taking several initiatives to promote blockchain and digital currencies.
Crypto players have been attracted to the Dubai property market due to its favourable investment environment, which includes tax incentives, strong legal protections, and a stable political climate. As a result, investors are now seeking to diversify their portfolios and protect their wealth through real estate investments.
Moreover, using cryptocurrencies has facilitated transactions in the Dubai property market. With blockchain, buyers and sellers can conduct their dealings securely and transparently without intermediaries. For international players, investing in Dubai’s property market means they can transact in crypto and avoid the complexities and costs of traditional transaction methods.
Developers in Dubai have started accepting cryptocurrencies as payment for their properties. These individuals see the crypto’s potential as an emerging asset class and have been using these digital currencies to rise above the competition. Expect blockchain and cryptocurrencies to dominate the Dubai property market in future.
Despite the high prices, the UAE’s property market remains a lucrative investment opportunity and is expected to grow in the coming years.