UNITED ARAB EMIRATES. Dubai: In 2022, the property market in the UAE, specifically in Dubai, witnessed unprecedented transaction figures, a trend that industry experts predict will persist throughout 2023. Despite the challenging global economic climate, affluent individuals have continued to invest in Dubai, thereby stimulating growth in the luxury market.
Real estate specialists indicate that a more mature market has fueled demand across the nation, spanning from apartments to townhouse and villa communities, and prices are projected to surpass pre-pandemic levels in 2023.
In an interview with Transcontinental Times, Rizwan Sajan, founder and chairman of Danube Group, gave some insights on Dubai’s real estate market.
What’s your comment on the growing interest of millennials in real estate?
When taking a global perspective, it can be observed that millennials are contributing to increased revenues by representing up to 35 percent of the total buyers. Furthermore, the COVID-19 pandemic has also contributed to the trend of millennial investors, especially in Dubai’s real estate market. With many businesses shifting to remote work and people spending more time at home, there has been a growing demand for larger living spaces with better amenities, which has led to increased interest in villas and townhouses.
The younger generation of investors in Dubai is attracted to the city’s fast-paced and dynamic lifestyle, world-class amenities, and modern infrastructure. They are also increasingly interested in sustainable and eco-friendly living spaces, which is reflected in the growing demand for energy-efficient and green buildings.
Overall, the trend of millennial investors in Dubai’s real estate market is a positive development that reflects the city’s vibrant and dynamic economy. As a real estate developer, we recognise the importance of catering to the needs and preferences of this demographic and are committed to providing innovative and sustainable real estate solutions to meet their expectations.
What’s your view on the demand-supply scenario in the emirate’s real estate market? Do you expect the prices to stabilize or get corrected?
Owing to the constantly increasing rents in Dubai, the demand for buying homes has significantly gone up. Selling prices for all types of properties have been appreciating for more than a year, beginning with Expo 2020’s commencement in October 2021. Moreover, the demand for ultra-luxury homes has also surged, with several villas and mansions priced over Dh 100 million sold last year, with a few even making headlines.
Is there a shortage of homes on the market? The answer is yes. Last year, rents in Dubai went up by 30 percent, thereby increasing the demand for investing in real estate and owning a home. Property prices will continue to rise, so the right time to invest in real estate is now.
Dubai and the UAE have consistently reaped the rewards of uncertainties elsewhere, including events such as the Arab Spring and the COVID-19 pandemic, which prompted affluent individuals to relocate to Dubai and invest in the emirate’s property and economy.
The changing face of the working class with “work from anywhere” has also bumped the migration to Dubai. The influx of capital from Russia and Ukraine after last year’s war is another illustration of how the real estate sector has prospered. Consequently, Dubai will continue to lure investments, regardless of external circumstances.
The question currently is how long the bull run in the real estate market will endure and whether it is sustainable. Is a price correction forthcoming, and if so, when might it occur? Traditionally, the mismatch in the demand-supply and price cycle lasts between 5 to 7 years, and we are currently beginning the third year of the growth cycle. Dubai’s real estate market will continue to grow in the next 3 years and entice foreign buyers and investors.
Real estate sector witnessed strong momentum in 2022. How do you see it continuing in 2023?
The property transaction level of 2023 looks very positive, especially if we consider the first two months of the year as a barometer. It could be another record-breaking year ahead of us. The growth momentum that began in Dubai’s real estate sector in 2021 continued at a faster pace in 2022. There are many reasons to believe that this momentum will continue. We are currently in the growth trajectory of the real estate economic cycle, and it will continue until it reaches its peak.
According to the Dubai Land Department, Dubai’s real estate sector witnessed a record-breaking year in terms of land and property transactions. The total value of land and property sales and mortgages increased by 76.5 percent to US$143.86 billion (Dh528 billion) in 2022 from US$81.74 billion (Dh300 billion) in 2021.
This is the first time that the value of land and property transactions has crossed the Dh500 billion mark, creating a new milestone in the history of the Emirates since the establishment of the Dubai Land Department in 1960. It happened within a year of the COVID-19 pandemic recovery, which is a remarkable turnaround.
What factors are driving the interest of HNWIs, and how does it reflect on the UAE’s property sector?
One of the primary reasons for Dubai’s attractiveness as an investment destination is its world-class infrastructure, global connectivity, ease of doing business, and access to world-class airlines that connect Dubai, Abu Dhabi, and Sharjah to over 250 cities worldwide. Moreover, the quality of life, safety, security, lifestyle, and overall comfort level in Dubai and the UAE serve as additional factors that encourage investors to relocate and invest in the region.
Dubai and the UAE benefit from visionary leadership that understands the intricacies of business, making it a land of opportunity, notwithstanding volatility and uncertainty in other parts of the world. Despite volatility and uncertainty in other parts of the world, Dubai and the UAE remain lands of opportunity. In Dubai, foreigners can create fortunes through hard work, vision, and intelligence.
Do you see an upsurge in sustainable financing in the UAE?
Investments in sustainable products and services are projected to continue to increase due to the government’s push for sustainability, and more businesses recognizing the added value of investing in sustainable projects. The UAE has declared 2023 the Year of Sustainability and will host COP28, providing the necessary boost to sustainable projects and driving investment.
Through the Green Economy for Sustainable Development initiative, the UAE aims to become a global hub and model for the new green economy. To date, the country has invested over US$40 billion in clean energy projects, with current trends forecasting the production capacity of clean energy to reach 14 GW by 2030. The UAE supports green infrastructure and clean energy projects globally, investing in renewable energy ventures worth about US$16.8 billion in 70 countries, with a particular emphasis on developing nations.
The country is also constructing its first food-grade plastic recycling plant to promote local and international partnerships for a circular economy. Investments in the circular economy are expected to be propelled by millennials, the new generation of entrepreneurs, who may require guidance.
What is the outlook for the ultra-luxury market in the UAE?
Upon analysing the trend in Dh100+ million homes, it is evident that the number of transactions is on the rise. Furthermore, this year, the segment, particularly the Dh50+ million homes, is expected to perform even better than in the past. A significant contributing factor to this trend is the increase in property prices, which are expected to continue to appreciate owing to the high demand.
Additionally, Dubai’s appeal to a greater number of Ultra-High Net Worth Individuals (UHNWIs) or super-rich individuals is another key aspect. Dubai’s efficient management of the COVID-19 pandemic has further strengthened its standing as the world’s safest place. Despite the worldwide struggle with the diverse COVID-19 virus strains, and the Ukraine war, Dubai managed to contain its spread and maintain the city’s airport open for foreign visitors.
Please let us know Danube’s strategies for 2023.
“Viewz,” our Dh2.05 billion iconic project with Aston Martin interiors, sold out within just a few days of its launch. This highly successful launch adds to the already promising real estate market in Dubai and is sure to further enhance its allure.
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