UAE / Dubai Residential Real Estate Overview: Q2, 2023

Key Highlights

– The UAE property market is in an upward trajectory, benefiting from solid demand, economic development, and international interest.
– Dubai’s property price index grew by 9.53% in 2022, on par with 9.25% in the prior year.
– Apartment and villa prices in Dubai in 2022 rose by 8.98% and 12.78% respectively.
– Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum emphasized Dubai’s enduring attractiveness to global investors and its emerging stature as a premier living and working hub.
– The UAE’s non-oil sector-driven economy expanded by 5.9% in 2022, and it is projected to grow at 4.1% in 2023.

Historical Context

– Dubai’s property prices witnessed a surge from 2002-2008, but the 2008 global financial crisis stalled growth.
– A series of declines followed from 2015-2020, with external factors like VAT introduction and the Covid-19 pandemic playing a role.
– Recovery began in 2021, with price rises in both Dubai and Abu Dhabi.

Recent Trends

– Dubai recorded a 44.7% year-on-year increase in property sales transactions in 2022, reaching 122,658, with a total value of AED 528 billion.
– Mortgage Finder noted that the UAE’s housing market maturity is evident in its rapid evolution, especially in Dubai.
– Visa reforms and residency laws, alongside favorable gross rental yields, further bolstered the market.

Rentals

– In December 2022, rental rates for Dubai residential units surged by 26.88% year-on-year.
– Some of Dubai’s prime locations, such as DIFC, Downtown Dubai, and Palm Jumeirah, witnessed varying rental rates.

Financial Landscape

– Mortgage rates in the UAE have traditionally mirrored US Fed rates due to the dirham’s peg to the US dollar.
– Interest rates have risen recently, but the mortgage market still exhibited growth in 2022, with a record 16,700 transactions in Dubai.

Economic Overview

While the UAE’s economic growth slowed slightly in 2022 and is expected to dip further in 2024, the outlook remains optimistic. External factors, such as global economic trends and geopolitical developments, might introduce uncertainties.