Introduction
A haven for opportunity and growth, Dubai has been dominating global charts, rankings, and indexes, surpassing some of the most prominent markets worldwide. Posting a 6.2% growth in its GDP in 2021, the metropolitan hub has quickly set itself up to be a top investment destination. Home to one of the world’s top 20 financial hubs, just what is it about Dubai that makes it so attractive?
Transparency all the way
In April 2022, Dubai’s Land Department, which seeks to position the city as the world’s premier real estate destination, introduced a new initiative whereby all real estate data would be made publicly available. As a result, JLL’s transparency index, GRET, listed the city of Dubai in the “Transparent” tier for the first time.
This substantial achievement qualified Dubai’s property market to be perceived as one of the most transparent in the MENA region. Owing to aggressive efforts by the Land Department to enhance digital services, ensure the provision of accurate data, and implement regulatory frameworks in line with best practices, Dubai along with its sister emirate, Abu Dhabi, were considered the strongest improvers in the transparency front.
With this move, Dubai’s real estate sector is held to a higher degree of accountability, governed by a solid foundation of regulations and an implicit need for data accuracy to ensure a more seamless, simplified investment journey for anyone looking to tap into its market.
A magnet for foreign investment
In 2019, the ‘City of Gold’ launched its Golden Visa program, whose requirements since then have been modified to fall in line with its goal of becoming a leading investment destination. According to the annual report by the General Directorate of Residency and Foreigners Affairs (GDRFA) in Dubai, over 150K of these visas were issued since the 10-year residency program was introduced.
One of the popular minimum requirements is property ownership – a method many Golden Visa seekers have resorted to which happens to be one of the many reasons why the city’s real estate market has been overperforming quarter on quarter and even month on month.
Reduced from the initial AED 10Mn minimum investment, property buyers can now purchase a ready or off-plan property for at least AED 2 Mn to qualify for the visa. As it continues to gain traction, Dubai’s share of the global citizenship-by-investment market is expected to grow 5x to $100Bn by 2025. To further capitalize on the scheme’s increasing popularity, some UAE-based developers are covering the visa cost for their customers.
With money flooding in from around the globe, it’s little surprise that Dubai’s real estate sector is leading the global charts against its counterparts in well-reputed markets. Most recently, the sector was deemed the largest offshore investment market globally, with $146 billion in foreign wealth, outperforming London’s property markets by 2x in size for foreign investments.
People are flooding in
As the industrial face of the UAE, Dubai registers the highest population of all the emirates, with the most recent figure around 3.5Mn, as of April 2022. With a rapidly growing population, it is no secret that Dubai boasts a diverse group of residents with over 200 nationalities! Of the 3Mn+ people who call Dubai their home, a staggering 85% belong to the expatriate community whose lifestyle demands are catered to by the city’s commitment to providing a high standard of living, a safe environment, and a wide array of fun activities.
According to recent headlines, experts predict that Dubai’s population could surge to 5.8M by 2040, as post-pandemic immigration to the emirate due in large part to the government’s robust COVID response.
As Dubai continues to be named a top destination for expats and tourists, its International Airport is planning for an influx of over 77Mn passengers in 2023, a 25% increase from the 62Mn+ passengers projected will travel through the airport in 2022. The fact that first-half volumes more than doubled in 2022 reinforces Dubai’s strategic position on an international scale as a primary destination for business travelers, tourists, and families looking to settle in the short and long term.
Yields you can’t turn down
Dubai recently ranked fourth in a bi-annual study of prime residential capital values and rents. Of the 30 major global cities listed, Dubai was the only non-US city to make it to the top five given its prime real estate sector’s stellar growth in the first half of 2022. During the same period, Dubai’s prime real estate prices increased by 4.7% and shot up 70.3% YoY as of August 2022.
Additionally, Dubai is known for offering considerably high returns on real estate investments, ranging between 6%-8% in popular neighborhoods, with double digits in prime locations like Palm Jumeirah, Emirates Hills, Jumeirah Bay Island, and more.
Dubai’s average transacted prices in the above prime areas is around AED 2,900/sq.ft, markedly 4x cheaper than prime neighborhoods in New York and London. For example, Jumeirah Bay Island recently recorded the sale of an AED 55Mn mansion at AED 7,775/sq.ft, still considerably cheaper than Chelsea’s AED 17,996/sq.ft in London and Manhattan’s AED 8,429/sq.ft in New York.
Conclusion
The global appeal of Dubai’s real estate sector is quickly setting up the emirate to claim the best performance worldwide for its prime residential market as top properties across the city continue to be snapped up in record time, at record prices. There is no denying the sector is on a record-breaking streak as weekly sales transactions are valued in the millions and billions of dirhams, which given today’s volatile market, presents a unique opportunity for those seeking stability.
The future does look bright and strong for the thriving sector, and you can be a part of it, with Stake!
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