While rental rates are rising across the country, real estate demand continues to boom. A major shift in buying behaviour has come through as a result of the pandemic that has extended into the first quarter of the year and a greater preference is placed on completed residential units, rather than on off-plan units. This is reflected in the sales seen through the first quarter of the year as the Dubai Land Department says that 70% of all transactions were finished units.
2022 has seen more end users continue to buy across the city due to low mortgage rates as these buyers are looking for larger living spaces in low density communities. The average sales price has increased 11% in the first quarter of 2022, in comparison with the same period last year (2021), mainly due to premium villa sales. Ready apartment buildings with larger spaces and a strong community offering also performed well as stock of ready villas depleted.
Apartments currently account for the majority of total completions in the first quarter of 2022, as the supply of new villas are limited due to lack of stock and pipeline. Villa stock in prime Dubai areas is limited and 2022 will see only a 3.6% of planned deliveries in prime submarkets, keeping prices at the higher end.
Over 10,000 new townhouses and villas have been launched in May 2022 by large developers but handover for these developments is not expected until between the end of 2024 and 2025. Of the villas being developed, 30% of them are in luxury communities that have golf courses, like Dubai South, Dubai Hills and Arabian Ranches III and only 5% are being developed in other market locations, which will help prices in those areas stay strong. The high supply of villas and townhouses in the coming years will result in a drop in prices below the USD$1.36mn.
As per the Dubai Statistics Centre, the population in Dubai was just over 3.5mn as of April 2022, with a target of 5.8mn people by 2040, and the city is ready for it. Whether it is apartments or villas, the city is bustling with constant new developments and is ready for the growing population. A very large number of new apartment buildings, villas and townhouses are being developed throughout the year and in the coming years and are all aligned with Sheikh Mohammed bin Rashid’s 2040 Urban Master Plan in mind, with the aim of transforming the emirate, and making it more sustainable and interconnected for an overall safer and more efficient way of living for everyone.”
Thanks to the leadership of Dubai, the city has become a true global destination, a business hub and a secure home base. People around the world now realise that if and when a new pandemic hits, or if there is economic or political turmoil, Dubai is the best city to be in as we have witnessed over the last couple of years.
Additionally, the recent updates to the UAE Golden Visa regulation is just another great initiative that will spur investment into real estate even more, especially with the flexibility that these new rules have to offer, providing residents with a strong reason to invest in the country long term and allowing non-residents to make UAE their second home.
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