Khaleej Times, Sunday, Feb 12, 2023 | Rajab 20, 1444
Visa, labour reforms and tourism to drive Dubai realty in 2023
Emirates:
The Dubai’s real estate sector will sustain an upward growth this year as the
investors and end-users will continue to pour money in the emirate’s residential
segment sector amid strong believe in the bright prospects of the economy,
experts say.
Analysts, leading executives and industry stakeholders said tourism, visa
reforms and labour reforms will continue to drive investment in the UAE’s real
estate sector.
They expect up to 10 per cent growth in real estate prices this year due to
strong demand in luxury sector as high net worth individuals and millionaires
are moving to Dubai because of its stable economy, successful strategy to
contain the Covid-19 pandemic and erecting excellent infrastructure.
Haider Tuaima, director and head of Real Estate Research at ValuStrat, said the
latest report suggests that there is a 7-10 per cent average increase in
property prices in prime areas.
"The ValuStrat Price Index saw 2022 general home prices 12.7 per cent over 2021.
The VPI for prime properties increased by 14.7 per cent during the same period,"
Tuaima told Khaleej Times on Saturday.
He said the current 7-10 per cent forecast represents the projected annual
increase of overall prices, prime and non-prime properties within the freehold
real estate market in Dubai.
"If we only take the prime segment, then the forecast becomes a 10-13 per cent
annual increase in prices by end of 2023," he said.
Positive outlook for 2023
Deloitte on Saturday predicted further growth for Dubai and Saudi real estate
markets this year and said strong recovery in tourism sector will benefit both
the markets in the region.
In its ninth annual Middle Estate Real Estate Predictions 2023 report, the
consultancy provides a positive outlook for 2023 and said all real estate
segments such as hospitality, residential, retail, commercial office space and
industrial will perform better this year.
Oliver Morgan, partner and head of development in Deloitte’s Real Estate team in
the Middle East said, 2022 has been a prosperous year for residential investors
who had a tough time looking back at more recent trends in Dubai.
“Riyadh and Dubai continue to be attractive commercial markets as occupiers
search for growth away from the Far East and Europe. Investment in
infrastructure plus evolving retail and F&B offers are a social marketer’s dream
which continue to draw record levels of tourists to both locations,” Morgan
said.
Strong recovery
Tuaima said Dubai’s residential market began to recover immediately after the
pandemic in 2020, this is mainly due to the desire for increased space and lack
of new build villa options, not to mention the migration of tenants to home
ownership and the broader economic fundamentals which fuelled the demand.
"This trend accelerated the following year, but the pace of capital value growth
slowed last year. 2023 is expected to see this trend decelerate further, with
some locations already reaching possible price ceilings and may witness negative
growth where excess supply is anticipated," he said.
In reply to a question, he said Dubai villa prices in general surged 20.5 per
cent last year when compared to 2021, however the same could not be said for the
majority of apartments, as capital values saw an annual increase of 6.5 per
cent, with many areas seeing no change in prices for 12 months.
Ata Shobeiry, chief executive of Zoom Property, said the Dubai property market
is expected to grow further in 2023, ably supported by local and foreign
investors.
"The market is already getting a lot of traction due to the high interest from
high-net-worth individuals. This trend is expected to continue in 2023. These
reasons, along with the government's support, will help Dubai real estate to
have reasonable growth, particularly during the second half," Shobeiry told
Khaleej Times on Saturday.
Demand for prime areas
Nikita Kuznetsov, chief executive of Metropolitan Premium Properties, said the
current and projected market conditions are in favour of owners of Dubai
residential properties, especially in sought-after locations such as the coastal
areas — Dubai Marina, Jumeirah Beach Residence, Bluewaters, Beachfront, Palm
Jumeirah and Port de la Mer.
“The Downtown and Business Bay, Dubai Creek and Jumeirah Village Circle are also
very popular among buyers. In terms of villas, the top areas of search are Damac
Hills, Emirates Living, Dubai Hills, Arabian Ranches 1-2-3 and Villanova,” he
said.
“All indications are that real estate stock is king and owners of Dubai
residential property find themselves ideally placed to make the most out of
their investment, as it is estimated that the city’s population will rise from
today’s 3.5 million to 5.8 million by 2040,” he said.
Ready-to-move-in properties
Referring to a recent report, he said a total of 90,881 real estate transactions
were registered in Dubai last year, exceeding the historic record high in 2009
of 81,182 transactions. Off-plan property sales witnessed an increase of 92.5
per cent while secondary sales saw a 32.4 per cent rise.
“This year, leading developers are expected to launch several projects and we
can expect to see a 30-40 per cent increase in the number of new projects that
will be announced,” Kuznetsov said.
“The secondary market is also expected to continue its strong upward trajectory
as there is considerable demand for ready properties. We can see that from the
number of Dh100M+ deals that were completed last year,” he said.
In reply to a question, he said all segments are expected to show growth, but
villas and luxury properties will be in very high demand as as there is very
limited supply in this particular segment “There will also be demand for
mid-size and lower-budget properties under Dh1 million from investors and end
users,” he said.
“In 2023, prices will continue to increase but we are not likely to see the same
rate of increase as last year. The price increase will be driven by demand for
ready-to-move-in apartments and villas due to a combination of a growing
population of long-term residents and spiking interest by international HNWIs
looking to invest in second homes,” Kuznetsov concluded.