What's at Stake this week?
January 7, 2023
We hope you had a productive start to the new year because Dubai real estate certainly has! This past Monday, the DLD reported that $626M worth of sales transactions were recorded in a single day. Arabian Business and other media outlets have signaled to investors that they can expect an even “more aggressive bull run” in 2023 indicating projected growth of 46% for the year ahead. Let’s look closer 
What in the World?
Sales skyrocket to a record-breaking AED 200Bn+
Dubai real estate ends the year on a positive note
Dubai’s real estate market had a banner year in 2022, according to a report from Dubai-based brokerage W Capital. The city saw a total of AED 265.6Bn, or $72.5Bn in real estate sales for the year, marking a 78.3% increase in value and a 62% increase in the number of deals compared to 2021. Performance in December was particularly strong, with the highest monthly value of real estate sales deals on record at over AED 26Bn.
Based on Property Finder’s market highlights review, from January to November, the number of registered sales transactions increased by 46% compared to 2021. This is even more impressive when you consider that the market has now surpassed its peak in 2013 by 38%. Overall, it has seen a 61% increase in sales, reaching a total of AED 240Bn. A large portion of these sales has been driven by off-plan transactions, which have increased by 86% compared to the previous year.
The success of the market has been attributed to a variety of factors, including Expo 2020 in the first quarter of the year, government stimulus packages and infrastructure initiatives, as well as major events most notably, Qatar’s month-long FIFA games.
As for Dubai’s economy as a whole, built on a foundation of income diversification through the development of strategic sectors and the promotion of future-focused economic activities, has also experienced strong growth in the first nine months of 2022, expanding by 4.6% on an annual basis to reach approximately AED 307.5Bn, or $84Bn. This was driven by the city’s efforts to solidify its position as a business, financial, and tourism center. According to Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, the city’s responsive and efficient economic framework, along with its ability to track and anticipate demand trends, has allowed it to take advantage of opportunities quickly.
Looking ahead to 2023, optimism reigns with regard to the city’s real estate sector’s performance prospects and projections. Indeed, it will remain important that the market adapts and is flexible in order to sustain its positive growth trajectory. Overall, the figures registered by the market over the past year are a testament to Dubai real estate’s maturity and attractiveness to investors seeking new homes in the UAE. On the economic front, The National reports Dubai has earmarked AED 67.5Bn for spending in an effort to sustain and drive momentum, expand its economic base, and work towards the goals laid out in its 2030 Strategic Plan.
The bottom line? Dubai’s economy and various sectors, including real estate, have experienced stellar growth in 2022. Its responsive and efficient economic framework has contributed greatly to the city’s success in capitalizing on opportunities and anticipating demand trends. With this in mind, it’s looking like 2023 will prove to be a promising year for Dubai indeed!
Stake Selects
It’s a seller’s market in the U.S. after all
Breaking down an NYT article so you don’t have to!
It is no secret that the housing market has been on shaky ground in 2022, and there are a handful of factors at play not only driving the upward trend in prices but also contributing to what New York Times real estate reporter, Ronda Kaysen, has referred to as a “housing market hangover”.
The current market has been tough on first-time home buyers due to rapidly increasing home prices. From December 2019 to June 2022, home prices rose by 45% according to a Home Price Index from S&P. Rapidly rising prices have made purchasing a home particularlyespecially difficult for first-time buyers, especially those who are financing their purchases in the wakeface of higher borrowing costs. By December 22, 2022, the NYT reported that the 30-year fixed mortgage rate stood at 6.27%, more than double the figure recorded in the same week a year prior.
To put this into perspective, Kaysen wrote: “Someone who locked in a 30-year mortgage on Dec. 22 for a $320K loan can expect to pay $1.97K per month in principal and interest, up 45% from the $1.36K a month they would have paid had they gotten a mortgage with the same terms a year earlier.”
As a result, sales have dropped significantly, which data from Redfin confirmed was a 35.1% decrease in November 2022 compared to the same month in 2021. Another factor at play was the limited inventory of homes for sale. As the demand continues to outstrip supply, the U.S. only had a “3.3 month supply of homes” this past November, which fares poorly against the requirement for a healthy housing market, usually a 4-5 months’ worth of supply.
As a result, sales have dropped significantly, which data from Redfin confirmed was a 35.1% decrease in November 2022 compared to the same month in 2021. Another factor at play was the limited inventory of homes for sale. As the demand continues to outstrip supply, the U.S. only had a “3.3 month supply of homes” this past November, which fares poorly against the requirement for a healthy housing market, usually a 4-5 months’ worth of supply.
What does this mean for homeowners and buyers? For those looking to sell their home, it’s looking like a seller’s market after all. With high demand and short supply, sellers could fetch a high price for their property. On the flip side, if one is in the market to buy, they must be prepared to face some stiff competition. What is good news for sellers is an unfortunate challenge for buyers…
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