Dubai’s real estate market results in 2022 and trends to watch in 2023
The United Arab Emirates is a country with a strong and stable economy, and this attracts expats and entrepreneurs from all over the world. As Aram Grigoryan, senior real estate expert at AX CAPITAL real estate agency in Dubai, notes the profit from property investments is one of the most significant income sources in the UAE, therefore serious resources are directed to the development of this industry. In addition, the UAE offers one of the friendliest investment policies in the world.
Among the significant factors that attract new players to the local market, the expert highlights a simplified long-term visa policy, a significant annual population growth as well as a high level of security and transparency of property transactions. Investors see that their funds are protected from external risks and inflation as they acquire a profitable and reliable asset, and the market continues to grow in conditions of high demand and healthy competition.
| Property type | Growth rate | Price per square meter, AED/$ |
|---|---|---|
| Completed apartments | 14% | 11 000/3000 |
| Off-plan apartments | 17% | 22 000/6000 |
| Completed villas | 9% | 9000/2500 |
| Off-plan villas | 23% | 11 000/3000 |
The dynamics of prices also depends on the neighborhood where property is located. Below we will look at how much the cost of property in Dubai in prestigious communities has grown over the year:
- Downtown Dubai – by 25%;
- Business Bay – by 29%;
- Nad Al Shiba First – by 52%;
- Palm Jumeirah – by 54%;
- Bluewaters – by 56%;
- Jumeirah Bay – 100%.
In addition, sales of luxury property also increased significantly. At the end of 2022, the emirate recorded a peak in elite property transactions. More than 1,200 sales were made with the total cost of AED 34 billion ($9.26 billion). The growth rate was 85% compared to 2021 in terms of the number of transactions and 97% in terms of their total value.
The luxurious locations that were in the greatest demand included:
- Villas in Palm Jumeirah – 124 transactions for AED 4.5 billion ($1.2 billion);
- Address Hillcrest at Dubai Hills Estate – 112 transactions for AED 2.7 billion ($735.1 million);
- Six Senses Residences in Palm Jumeirah – 69 transactions for AED 2.1 billion ($571.7 million);
- Elysian Mansions in Tilal Al Ghaf – 63 transactions for AED 1.6 billion ($435.6 million);
- Emirates Living – 49 deals worth AED 2.2 billion ($599 million).
At the end of 2022, analysts recorded a clear shift in favor of off-plan in Dubai. While in 2021 55% of transactions were completed housing and only 45% off-plan options, in 2022 the situation changed dramatically. Only 44% of transactions were finished properties, the remaining 56% were off-plan units.
The largest number of new projects launched in the following areas:
- Jumeirah Village Circle (JVC) – 5,500 residential units;
- Damac Hills – 5,100 residential units;
- Business Bay – 3,900 residential units;
- MBR City – 3,200 residential units;
- Dubai Marina – 2,900 residential units.
Rent has increased by an average of 9% for villas and 14% for apartments over the year. However, in this case, the location of the property is also important, as rental prices have increased more significantly in some Dubai communities.
Rent rates for apartment have increased in:
- Dubai Hills Estates by 16%;
- Business Bay by 17%;
- City Walk by 20%;
- Jumeirah Village Triangle by 24%;
- Dubai Creek Harbor by 24%;
- Downtown Dubai by 28%;
- Dubai Marina by 29%;
- Palm Jumeirah by 30%;
- Town Square by 43%.
Villa rent rates have increased in:
- Town Square by 16%;
- Arabian Ranches 1 by 20%;
- Mudon by 25%;
- MBR City by 40%;
- Meydan (Nad Al Shiba First) by 50%.
At the end of 2022, the greatest demand for move-in ready and off-plan apartments in the emirate was observed in:
- Business Bay;
- Dubai Marina;
- JVC;
- Al Merkadh;
- Downtown Dubai.
For instance, 9,243 residential units were sold in Business Bay alone. In addition, in this community the largest number of off-plan apartments was sold. The leading community in terms of move-in ready apartments is Dubai Marina.
- Damac Lagoons;
- Jabal Ali First;
- Dubai South;
- Damac Hills 2;
- Villanova.
The cost of real estate in Dubai today continues to increase along with sales volumes. For instance, 9,827 transactions were concluded in the emirate in January worth AED 28 billion ($7.6 billion), which is about 70% more than in January 2022.
How much does an apartment in Dubai cost? The price for apartments in 2023 increased by an average of 12.5% compared to January 2022, reaching AED 1.3 million ($354,000). For villas, the growth rate reached 34.9% and the average price in January increased to 2.6 million AED (708,000 $). Thus, real estate prices in Dubai are now rising in all segments.
Experts agree that Dubai’s real estate market will continue to grow. According to the forecast based on artificial intelligence, in 2023, prices in the residential real estate segment are highly likely to grow up to 46% in certain communities, while the overall price increase is expected to be 15%. The jump is predicted in not the most obvious locations such as Wadi Al Safa 4, Hessayan First and Al Yalayis while the growth rates of prices in popular communities like Palm Jumeirah are expected to be insignificant.
Some brokers make even bolder assumptions, assuming that average prices in the emirate can grow by 20%. They say that property prices and rent rates in the city will increase since the demand will grow from wealthy buyers and tenants and foreign investors. They believe that the market will grow accordingly.
There are also more conservative forecasts. Some analysts believe that prices in 2023 will grow by about 5% and Dubai’s property market as a whole will slow down. However, even skeptics admit that the cost of housing in the metropolis will increase.