The global pandemic has affected all spheres of life, including the real estate market in Dubai. Although the United Arab Emirates almost did not close the borders, it was not possible to avoid a decrease in demand for housing. Buying apartments in Dubai in 2020 required less investment than in 2021. The situation is still changing. The official property website Emirates.Estate will try to understand the main market trends and their prospects.
Modern reality of the property market in the UAE
According to https://emirates.estate/, the decline in real estate prices reached more than 11% year-on-year for the 12 months of 2020. Since the first months of 2021, prices in the country have increased significantly. Since their relative decline affected the country before the outbreak of the pandemic, it is obvious that the economy is stabilizing, and consumer demand is growing in the UAE. Experts believe that this was facilitated by measures taken by the authorities, including:
- Market transformation. For doing business outside of free zones, the schemes have been simplified. This attracts not only tourists to the country or those who are going to move to a permanent place of residence. In addition, the state has launched a program that provides for the creation of new jobs. This demand is coupled with supply.
- Active involvement of external funds. For buying real estate in Dubai, the state allows the use of mortgage lending at affordable rates. You can also get two loans: for the initial payment and for further payments. The term of down payment can reach 50 years or more, which allows you to bequeath property with debt obligations.
- Comfortable conditions for expats. It is almost impossible for foreigners to obtain citizenship in the UAE. This does not prevent them from having real estate in Dubai and taking advantage of the absence of taxation when owning and disposing of housing.
It is expected that by 2040, the population of Dubai will exceed 5 million people. The number of residents will increase in the country due to foreigners who will need housing for living.
Housing market statistics
During the first half of the year, more than 27,000 residential real estate transactions were made in Dubai. The total amount of transactions exceeded $16 billion. During 2020, this amount did not exceed $20 billion, but demand increased. Before the pandemic, studio apartments or cozy small apartments with one or two bedrooms were popular, which are regularly used for investment. Now an increasing number of buyers prefer detached houses with an isolated territory or a hotel entrance. Villas, townhouses and even penthouses are actively being bought in Dubai.
Is primary or secondary housing more popular in Dubai?
Secondary property in Dubai accounted for about 50% of transactions in the first two quarters. Off-plan housing had the remaining transactions. The explanation for this is quite simple: shared-equity construction is much more profitable than apartments that have been already put into operation. There is only one drawback: not everyone can wait for the moment from the purchase to the commissioning of the building.
In order to register real estate transactions, the buyer must pay a commission of 4% of the total amount. If this is a secondary housing, you cannot avoid additional costs. When buying a property in Dubai from a developer, payment will be deferred.
How prices change
According to statistics, the average cost of one square meter of housing starts from $5,000. To consider prices in relation to individual properties, they can be divided as follows:
- A studio apartment can cost $ 350,000.
- The average price of apartments is more than $ 700,000.
- The cost of penthouses depends on the area and starts from a million and above.
Buying your own house in Dubai can cost $ 1,500 million or more. Luxury villas worth several million are no less popular than apartments with an area of 100 sq. m. or more.
What about renting?
Dubai is in demand as an emirate for long-term investments. Apartments with an area of up to 100 sq. m. and a little more are much more popular. The profitability of housing can reach 6% per annum if it is located in a popular area. The figures for villas and penthouses are lower, but their cost is initially much higher. In general, housing in Dubai can bring real profit.
What does the cost of housing depend on?
Potential investors are interested in how much the purchase will cost. The cost of the property is associated with a wide range of aspects, including:
- General trends in demand and the number of offers.
- The popularity of the area and the degree of its infrastructure development. If there is a seashore in the district, access to water remains an important factor.
- The area of the housing with amenities and views from the windows.
Analysts do not predict dramatic growth, but note that the first half of the year demonstrated high demand. It is assumed that in many ways this will be facilitated by a decline in development rates of the most popular communities of Dubai for a trivial reason: not all parts of the city have areas in which it is possible to develop.
It is also expected to attract investment in connection with the Expo-2020 exhibition. It was postponed due to the global pandemic and is scheduled to open in the autumn. This event will affect the business life of not only the emirate, but also the entire state as a whole, and no one expects a drop in housing prices.
Emirates.Estate helps customers buy suitable villas in Dubai
There is no doubt that the emirate will continue to develop. Most likely, in the near future there will be a moderate price increase, predicted in the range from 3 to 5%. In order not to miss the benefits, you can start choosing real estate for moving to a permanent place of residence or investing right now. The catalog on the website Emirates.Estate contains relevant ads from local property agencies and developers.