According to a report by Bloomberg, the cost of prime real estate in Dubai has increased by 89% over the past year. Those figures have further climbed by more than 100% in well-known areas like Palm Jumeirah, Jumeirah Bay, and Emirates Hills as affluent buyers have waited in line to purchase real estate in the city’s newest hotel and real estate projects.
For instance, in July, a home in Palm Jumeirah sold for a record-breaking $82 million (AED 1,327,200). In two days in September, 386 sales totaling more than $325 million (AED 1,193,725,000) were made in the city, 341 of which were condos, villas, and apartments for sale in Dubai, housed in exclusive gated communities all across the city, according to a survey by Arabian Business.
Another research by CNBC, witnessed $35 billion (AED 12855.5 million) in real estate sales in 2021, the highest year since the 2008 financial crisis.
A report by Faisal Durrani, head of Middle East research at Knight Frank, suggested that “Prime residential values in Dubai continue to strengthen, growing by 29% in the third quarter alone, fuelled by a persistent deluge of ultra-high net worth individuals who are focusing on Dubai’s premier districts in search of second homes.”
Real Estate Price Surge in Dubai
The price of premier real estate in Dubai increased by 70.3% in the year that ended in September 2022, making it the top earner on Knight Frank’s global index, which focuses on a city’s most coveted and expensive residences, frequently the top 5% by market value. This is far higher than the index’s increases of 2.5% in London, 8.9% in Paris, and 7.3% in New York, where deals have been impeded by rising interest rates and slowdowns in the economy tied to the energy sector.
The turnaround for 2022 has been amazing. The city’s real estate market crashed a little more than ten years ago. Currently, Dubai, a city in the United Arab Emirates, is the epicenter of one of the largest luxury housing booms in history. Banks are still owed billions of dollars by some developers, and last year, a significant international financial watchdog added the UAE to its “gray list.”
The Persian Gulf emirate has experienced a recent upswing that began more than a year ago. According to HSBC Holdings Plc, the city attracted real estate investments worth around $6.6 billion (AED 24241.8 million) in August, the largest by volume and value in 12 years. The government has implemented regulations, such as higher down payments, to reduce instability.
In addition, CBRE estimates that since roughly 70% of sales currently take place in cash or without mortgages, any delay brought on by higher borrowing costs is expected to be mild.
The 10-Year Golden Visa
According to the immigration consultant Henley & Partners, the UAE will bring in a net of 4,000 billionaires this year, the largest share of private wealth in the world. The government of Dubai has adopted reforms to make the emirate more socially liberal than it was previously and has offered visitors 10-year visas.
The recently updated 10-year UAE Golden Visa regulations are a great initiative to boost real estate investment even more, especially given the flexibility of the new regulations. This will encourage locals as well as foreign investors who are ‘hunting’ for returns on investment to make long-term investments in the UAE and enable non-residents to make the UAE their second home.
In exchange, they will be eligible to apply for a three-year resident visa under the golden visa program. They may also collaborate with other firms to invest in different enterprises or run businesses themselves.
As a result, Dubai’s residential & commercial properties business sector and the economy will experience a significant upgrade thanks to the outstanding prospects and incentives offered to international investors under this golden visa plan.
Property Tax Benefits
There are significant tax advantages for property buyers in Dubai. According to the research firm CBRE, buying a luxury home in the UK could result in taxes of 15% or more, whereas in Dubai, a buyer pays a 4% transfer tax. There are corporate levies and VAT in the city, but no income taxes.
Due to the fact that the Emirates is a tax-free state, both tourists and locals are drawn there. Dubai property tax doesn’t have to rely on direct taxes to generate income because of its oil and trade profits. However, it avoids the property tax by charging a 4% transfer charge in addition to a monthly “housing fee” (sometimes referred to as the municipality tax).
In addition to paying a charge to the Dubai Land Department upon the transfer of the property, all property owners are required to pay 5% of the area’s average rental value
Favorable Interest Rates
Dubai will draw attention as a secure location for affluent people to establish their presence. The dynamics of supply and demand in the real estate market in Dubai have also changed dramatically from the past. This is large because the correct kinds of apartments, in terms of location, connection, amenities, build quality, and scenic views, are being offered. Despite the perception of oversupply, these units are seeing significant demand and are selling out quickly.
Moreover, in the near future, investment and purchase decisions will be significantly influenced by environmental, social, and governance norms. Dubai’s improvements in the ranking for transparency, driven by new rules governing industry-leading practices, beneficial ownership tracking and sustainability reporting, and improved digital services, will reshape the market and draw foreign buyers as well as new buying habits.
Match budgets and buyer expectations
According to the findings of a survey done by Reuters, affordability is a critical factor in the growth of the real estate industry. Over the next two years, it is anticipated that Dubai’s property prices will increase steadily due to demand from international investors drawn to the region’s low property prices.
Economists warn that the volume of purchases may be somewhat limited by increased borrowing rates and a shortage of reasonably priced properties. From January to June 2022, the Dubai real estate market saw approximately Dh170 billion in transaction volumes. Due to new visa-related measures and rules to draw in foreign direct investments, sentiments in Dubai’s real estate market have increased and stayed upbeat. Rent and property sales will experience a consequent increase in transaction volume and value that is anticipated to last until the end of the year.
Relevant: New Green Visa Rules
The Property Market Will Continue to Rise in 2023
Since the start of 2022, the real estate industry has experienced significant growth. In Dubai’s most well-established neighborhoods, including Emirates Living, Dubai Hills Estate, and Arabian Ranches, villa prices have doubled. In 2023, villas in Dubai are anticipated to continue to rule the market. Important locations like Palm Jumeirah will continue to rise in value and attract investors and homebuyers seeking a high return on investment and upscale living.
The Palm Jumeirah is still the cheapest of Dubai’s three most desirable residential neighborhoods, with an average transaction price of AED 3,054 ($831.58) per square foot, as opposed to Emirates Hills (AED 5,220) and Jumeirah Bay Island (AED 6,345).
Additionally, since the year’s beginning, apartment prices have increased by around 25%. Since its debut, the cost of waterfront condos like Beach Vista at Emaar Beachfront has skyrocketed. Prices for accommodations at five-star hotels have increased by 30 to 40%.
Given that the current trends in home prices are anticipated to persist through 2023, the price increase is probably going to surpass pre-pandemic price levels. Investors can anticipate a 3% average increase in property prices during 2023, according to data that was made public by Reuters in September of this year.
If you want to benefit from Dubai’s booming real estate market and invest in the property market for a higher return on investment, then contact a professional real estate agency like Next Level Real Estate. The expert team of agents at Next Level Real Estate will help you find the best property that suits your needs and preferences.