Dubai’s stunning property rebound lifts sales, rents to record highs
IN A spectacular turnaround in Dubai’s property market last year, the Middle East’s financial hub broke a decade-long record for total home sales and lifted rents to unprecedented levels.
The city registered 90,881 residential transactions in 2022, noted real estate adviser CBRE Group – beating the previous record of 81,182 deals in 2009. Ijari contracts, or home-rental agreements, increased 11 per cent in 2022 from the year before, reflecting growth in the city’s population.
“It’s been an incredible year,” CBRE’s head of research Taimur Khan said in an interview. “This is the highest number of transactions ever, partly because the supply of new homes is increasing, and because the take-up has been strong.”
Dubai’s property market has bucked the trend in much of the world, where values have largely dropped amid surging interest rates and an increasingly darkening economic outlook.
In the expatriate-dominated city though, home prices and rents have surged amid an influx of Russians looking to protect their wealth following the invasion of Ukraine, and as bankers fled strict lockdowns in Asia. The arrivals have also included Israeli investors, crypto millionaires and hedge-fund executives, following the city’s easing of social restrictions and liberalising of laws to consolidate its position as the region’s pre-eminent business centre.
The average annual rent for a villa – which are typical family homes – in Dubai surged by about 25 per cent to 282,150 dirhams (S$102,281) in the year to December; average apartment rents jumped 27 per cent to 95,168 dirhams, said CBRE. The average price of apartments rose 9 per cent, and villas, 12.8 per cent in that period.
“I think the market will slowly taper off this year,” CBRE’s Khan said. The only surprise that could change that would be a sudden return of investors from China, who were the fourth largest buying group in Dubai until a few years ago, he said. Those buyers tend to be interested in mid-scale investment properties; Russian buyers, on the other hand, focus more on the luxury end of the market, he said.
About 70,000 homes are now under construction in Dubai and that additional supply will help take pressure off rents and prices. But Khan expects the number of properties actually finished in 2023 to be lower, because developers stagger the release of housing supply, he said.
“I see a significant moderation in rental rates this year, particularly in some of the core areas,” he said. “Last year’s rental rate increases aren’t sustainable, and we’re starting to see resistance – tenants are voting with their feet and moving to neighbourhoods they would’ve never considered a couple of years ago.” BLOOMBERG
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