Dubai real estate deals surge 43% on high investor demand

Dubai real estate market continued its upward trend as sales transaction surged 43 per cent in February on high demand from the foreign investors and end-users, according to a report.

Latest data released by Property Finder shows that property transactions climbed to 9,020 last month compared to 6,310 in February 2022, generating sales revenue of more than Dh26.7 billion in February this year — an increase of 65 per cent. The emirate recorded 9,800 sales transactions in January 2023.

The existing (secondary/ready) transactions recorded approximately 20 per cent year-on-year growth in volume by registering more than 4,500 deals. The volume of the off-plan properties also surged 77.8 per cent by reaching more than 4,500 transaction last month.

In terms of value, the transactions for existing properties witnessed an increase of around 32 per cent, reaching over Dh15.6 billion compared to Dh11.8 billion in February 2022, recording the highest volume and value for the month of February for in a decade.

Dubai Marina, Downtown Dubai, Business Bay, Palm Jumeirah, and Jumeirah Village Circle remained the top searched areas in February 2023 for apartments while Dubai Hills Estate, Palm Jumeirah, Arabian Ranches, and Mohammed Bin Rashid City were the most desired areas to own rent villas/townhouses.

Ata Shobeiry, chief executive of Zoom Property said the Dubai property market is headed for another strong year despite challenges posed by inflation and a supply glut.

“It will majorly benefit from its strong economic conditions in the Middle East region and the fact that it continues to be the preferred choice of foreign investments and high-net-worth individuals (HNWIs) for real estate investment,” he said.

Positive outlook

In another positive development, CBRE anticipates a positive outlook for the real estate sectors across the Middle East in 2023, as elevated oil prices and resolute economic growth are expected to support strong levels of occupier and investment activity.

The real estate consultancy, which released its 2023 Middle East Real Estate Market Outlook, said the GCC economies will continue to record relatively strong growth rates in 2023.

“Both the hydrocarbon and non-hydrocarbon sectors have seen strong rates of recovery over the course of the last year, with economic growth in the GCC region noticeably outpacing the global average during 2022. Over this period, economic growth in GCC countries recorded an average growth rate of 6.3 per cent and as we move into 2023, their GDP growth is expected to reach 2.7 per cent,” according to the report.

Taimur Khan, head of Research for Mena at CBRE in Dubai, said GCC economies and real estate markets, on the whole, are expected to continue to see performance levels remain relatively strong over the coming year, despite the weaker global economic backdrop.

“In the region’s key office markets, Dubai and Riyadh, with available supply being constrained, we expect rental rates to continue to grow. In other markets, a combination of subdued demand and excess supply will mean rental growth is likely to remain anaemic,” he said.

“Residential markets in the region will likely see somewhat fragmented performance in 2023, supply gluts in certain markets will drive down performance, whereas lack of supply in key business hubs such as Dubai and Riyadh is likely to mean these markets will outperform,” Khan said.

Shobeiry of Zoom Property said the real estate sector in the Middle East region will face challenges in 2023 in the form of inflation and supply gluts, which may result in fragmented performance. However, UAE real estate is expected to surpass other markets as it continues to garner high interest from HNWIs and foreign investors.

Saad Manair, senior analyst at Crowe UAE, said industrial investments on track in Saudi Arabia, that has increased by $8.54 billion in 2022, as part of the country's ongoing efforts to diversify its economy and align with the objectives outlined in Vision 2030.

“About 1,023 factories commenced operations in 2022, with investments totaling $7.7 billion. The big strength of Saudi Arabia is private sector activity, large domestic demand and government assets, whereas the challenges has been the dependence on oil revenue, limited top foreign talent and unpredictable policies. This will have a positive impact on the demand in the real estate market in Saudi Arabia. However, a lot depends on the way in which laws and regulations take shape and that the Saudi Arabia meeting its delivery promises,” Manair told Khaleej Times on Thursday.

Evolution in property preferences

The Property Finder data indicates a significant evolution in property preferences for both owners and tenants as 59.4 per cent of people who have the desire to own property are looking for an apartment, while 40.6 per cent are interested in villas/townhouses.

Additionally, in the rental segment, 80 per cet of tenants have been searching for apartments and 20 per cent are looking for villas/townhouses.

— muzaffarrizvi@khaleejtimes.com