Dubai Property Market Trends in 2022
The COVID-19 pandemic has brought great changes to the economy and real estate market of the UAE. In 2021, the country demonstrated a rapid pace of recovery in the economic and real estate sectors thanks to its effective vaccination measures and government support for economic sectors.
The emirate of Dubai distinguished itself from other countries around the world and showed record economic growth in 2021 at a level of 3.1%. In addition, the largest number of real estate transactions were made in the third quarter of 2021 since 2009.
Investors wishing to purchase residential and commercial property in the emirate are interested to know what is in store for the Dubai real estate market in 2022, and which kind of housing will be most in demand. We have prepared a special article in which we have reviewed the current trends in the property market, the future development of this segment in 2022, as well as current prices for residential and commercial real estate in the emirate of Dubai.
Trends of The Property Market in Dubai
Against the background of the COVID-19 pandemic and forced self-isolation, people wanted to expand their residential territory, so the current demand for villas and townhouses in the UAE will only grow. In addition, Expo 2020, which will last until March 31, 2022, only increases the demand for this type of real estate in the areas adjacent to the international exhibition venue. According to the report from ValuStrat, 18 villas and 4 apartments were sold in Palm Jumeirah, Emirates Hills and Dubai Hills Estate in September with a total value of AED 30,000,000 (USD 8,170,000).
Capital values of villas in the emirate of Dubai also rose in September 2021 compared to a year earlier because investors continue to invest in big and high-value residential property. ValueStrat also stated that the increase of capital values was at a level of 20%. Faisal Durrani, Partner and Head of Middle East Research at Knight Frank, stated that rental rates for villas continue to rise, while apartments continue to cheapen. Apartment lease rates in autumn 2021 were improving gradually but remained 5.3% below the same period last year. Villa’s lease rates increased by about 15% compared to last fall.
There is also a trend for short-term rentals in Dubai, due to the high demand from visitors of Expo 2020. Districts in the emirate such as Dubai South, Al Furjan and Discovery Gardens will be expected to show an increase in short-term rental prices of housing units. Studios and 1-bedroom apartments have the highest occupancy rates in Dubai. The average occupancy rate in some of the most popular areas of the emirate such as Dubai Marina, Palm Jumeirah, Downtown Dubai, JBR and City Walk constitutes about 90%.
How The Real Estate Market in Dubai Will Develop in 2022
Property prices in the emirate of Dubai will rise in 2022 due to supportive economic reforms from the government and an accelerated vaccination programme, which has already hastened recovery from the slowdown caused by the coronavirus pandemic last year. Economic support measures and initiatives in the country include a residence visa for retired workers and for remote workers (freelancers).
Developers in the UAE are anticipated to deliver 50,000 to 60,000 housing units next year, as predicted by the Head of Real Estate Research at ValuStrat Consultancy – Haider Tuaima. Leading developers in Dubai such as Emaar and DAMAC have launched special packages in order to attract more clients and investors. These packages include Dubai Land Department registration fee waivers and flexible payment plans. Such measures will increase the sales of properties from Emaar and DAMAC. It is expected that developers in Dubai will continue to explore incentives to attract buyers in 2022.
According to the experts, a large share of the total sales in Dubai will be accounted for by the off-plan real estate sector. Moreover, prime waterfront residential locations will arouse particular interest among both investors and tenants. One of the main reasons for this was the introduction of a freelance visa in the UAE in September 2021. This visa allows people to live in the country and work as self-employed. In addition, freelancers in the UAE also have the opportunity to sponsor their family members, including children, spouses and parents.
Bloomberg stated that the growth rate of real estate prices in the country is expected to be 2.5% in 2022. At the moment, a lot of properties are under development and will be put into operation in the near future. The trend of development of new properties in the emirate of Dubai will continue throughout 2022-2023.
Villa Prices in Dubai
Villas have become a popular kind of real estate in Dubai as of 2021. Villas in the emirate offer spacious living areas, gated gardens, swimming pools and parking spaces. The cost for houses varies depending on their location.
Prices in several of the most popular villa communities in Dubai are:
- Palm Jumeirah. The starting price for villas in this community constitutes AED 6M (USD 1.6M) with the highest price being AED 180M (USD 49M)
- Mohammed Bin Rashid City. The starting cost for homes here constitutes AED 2.5M (USD 680K) with the maximum cost of a villa around AED 120M (USD 33)
- Dubai Hills Estate. The minimum price for a villa in Dubai Hills Estate is AED 2.3M (USD 626K) and the maximum price is around AED 150M (USD 41M)
- Arabian Ranches 2. The minimum cost constitutes AED 1.7M (USD 463K), while the maximum price is approximately AED 8M (USD 2M)
- Tilal Al Ghaf. The starting price to buy villa here is AED 1.6 (USD 436K) and the maximum cost is AED 20M (USD 5.5M)
- Al Furjan. The minimum price for a villa for sale in this neighbourhood constitutes AED 1.6M (USD 436K) and the maximum cost is about AED 14.5M (USD 4M)
- DAMAC Hills 2. The minimum price to purchase a villa in this community constitutes AED 549K (USD 149K) and the maximum cost is AED 9.9M (USD 2.7M)
The high demand for villas in the period after COVID-19 is largely due to people’s desire to isolate themselves from society in order to maintain their health. Spaciousness and freedom of movement are also the main reasons for the demand for villas and townhouses in Dubai.
The notable increase of villa prices in the emirate was in May 2021. According to the Property Monitor data, the upward change ranges between 0.86% and 5.65%. To read about the best property sales in Dubai in 2021, click here.
Land Plot Prices in Dubai
Many communities in the emirate of Dubai offer land plots for sale. Some of them include Dubai Hills Estate, Jumeirah, Al Furjan, Nadd Al Sheba, Mohammed Bin Rashid City, Jebel Ali, Jumeirah Village Circle and many other districts.
The cheapest residential plots are sold in the DAMAC Hills 2 community. The starting price to purchase a residential land plot with an area of 2,700 sqft here constitutes AED 390,000 (USD 106,000).
An inexpensive land plot can also be purchased in the Jebel Ali area, as the minimum purchase price for residential land with an area of 9,842 sqft constitutes AED 836,000 (USD 228,000).
The most expensive land plots for sale are located in the following districts in Dubai:
- Sheikh Zayed Road (SZR) area – AED 400M (USD 109M) for a land plot with an area of 80,450 sqft
- Palm Jumeirah – AED 399M (USD 108M) for a mixed-use land with an area of 309,171 sqft
- Business Bay – AED 231M (USD 63M) for the mixed-use land plot with an area of 125,476 sqft
Commercial Real Estate Prices in Dubai
Commercial property is in high demand among investors because of favorable conditions and the tax climate for businesses in the UAE. For example, expats can open a company in the state with 100% ownership. Another advantage for businesses in the country is that there is a minimum amount of taxes; there are no taxes on personal income and inheritance in the state. Moreover, most firms in the UAE are not obliged to pay corporate tax. Only a limited range of companies must pay this tax, for example foreign enterprises engaged in oil and gas production and branches of foreign banks.
The emirate of Dubai offers a mix of commercial properties, including offices, warehouses, retail spaces, land for commercial purposes, shops, showrooms and so on. The most popular communities for purchasing commercial real estate comprise districts such as Business Bay, the SZR area, Jumeirah Lake Towers, Downtown Dubai, Dubai Industrial Park, Al Quoz and many more.
Buying and further leasing commercial real estate to businesses is one of the most popular ways of investing in Dubai. The estimated ROI for commercial property in the emirate ranges from 4% to 9%. To know more about other ways to invest money in Dubai, read this article.
Districts such as Business Bay, Jumeirah Lake Towers, Downtown Dubai and Barsha Heights (Tecom) offer the largest number of offices to buy. The starting price for purchasing an office with an area of 1,893 sqft in the Business Bay community constitutes AED 3.3M (USD 900K).
Investors can buy warehouses in areas like Jebel Ali, Al Quoz, Dubai Investment Park, Dubai Industrial Park, etc. The minimum selling price for a warehouse with an area of 10,782 sqft in Dubai Investment Park constitutes AED 1.8M (USD 490K).
Popular communities for purchasing a retail space include Jumeirah Lake Towers, Business Bay, Dubai Marina, Meydan and DIFC. The starting cost for a retail space with an area of 737 sqft in Jumeirah Lake Towers constitutes AED 737,000 (USD 200,000).
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