Revealed: Top investment trends and property hotspots in Dubai’s post-Expo real estate market

With house prices in Dubai increasing by 10.6 percent in 2021 and by a further 2.6 percent during the first three months of 2022, the highest rate of annual growth since 2015, the city’s property market is booming.

To discuss these recent trends in Dubai’s real estate market and investor behaviour, Arabian Business sat down with Hawazen Esber, CEO of MAF Communities.

In an exclusive interview, Esber listed the communities in Dubai which are likely to experience the most growth in the upcoming months, while also outlining Expo 2020’s impact on the city’s property market.

What are the market trends nowadays in terms of real estate investors’ behaviour, their preferences and demand indicators?

With Dubai’s property market going from strength to strength, investors can expect sustainable returns over the long term. Looking at the market situation in general, the likelihood of investing in Dubai has become increasingly more attractive.

Driven by the burgeoning consumer trend for improved health and well-being, the demand for villa properties, in particular, represents a solid investment in the current climate. Since the onset of the pandemic, the demand for villas has driven prices up by 22 percent with 85,000 residential real estate transactions and a total value of AED300billion in 2021 alone.

Today’s homeowners are placing a high value on being able to retreat to a quiet space. In line with that, buyers want greater square footage per floor plan, additional flex space and the opportunity to design a home as per their needs.

Furthermore, with sustainability on top of everyone’s mind, customers are keen to ensure their home is energy efficient and environment friendly, proofing that smart living spaces are the future.

On the other hand, investors are actively looking to add hard assets to their portfolios, making real estate one of the premier targets across private wealth, institutional investors, and private equity.

Simultaneously, low-interest rates across many countries and regions support asset values and fuel demand. The industry’s focus on climate change is also reflecting on investors, and environmental, sustainable and green building certificates are becoming a solid decision-maker.

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Could you comment on the general increase in residential rental prices in Dubai which everyone has been talking about?

While real estate markets everywhere softened during the pandemic, the past twelve months have seen a resurgence.

The Dubai rental market is no different and showed a strong recovery in 2021 as the economy continued to recover, aided by a successful vaccination programme and gradual opening of international borders.

A recent report shows that the average rents have increased by 10.1 percent, with average apartment and villa rents increasing by 8.3 percent and 22.8 percent, in the past 12 months to January 2022. Starting the year on a high note, there are indications that 2022 will carry on the momentum which began in 2021.

The continued efforts of the government, such as expatriate-friendly policies, visa reforms, business ownership and employment opportunities, to keep the UAE in the spotlight as the best place to live and work, have been key drivers for this upwards trend.

Given the above, what communities or areas across the city remain affordable or are up and coming for price conscious residents?

With Dubai’s GDP predicted to expand to 5 percent this year, the outlook for the residential property market remains buoyant.

We believe the villa segment will continue its dominance, while the apartment market will become more stable toward the end of the year.

Looking forward, it is expected that new communities across different locations such as Dubailand, Dubai South and District 2020 will fuel the market with unique living spaces.

In addition, there are still numerous projects to be completed across the next two to three years, which is likely to favour buyers as we advance.

On the other hand, key areas are predicted to remain high in demand as more foreign investors are expected to foray into the property market.

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Dubai South

What are the main challenges facing the real estate market in GCC (UAE/KSA/Oman)?

The latest significant challenge the industry has been facing is the increased costs and supply chain bottlenecks. This occurs at every level, with materials and contractors all rising in price.

The primary driver is the ineluctable law of supply and demand – as demand increases and supply decreases, prices increase.

Another challenge is the evolving lifestyles of potential buyers, as residential properties need to evolve alongside them.

For a developer, this is a balancing act of ensuring the end users’ needs are anticipated to make development attractive when it reaches the market.

Now more than ever, property marketing requires you to define your unique selling points (USPs) and determine your exact target market with the utmost precision.

Our unique USPs must meet the requirements of both local and international buyers and embrace today’s lifestyle, fulfilling the diverse needs of global citizens.

What has been the impact of Expo 2020 on the real estate market in the UAE & the GCC?

Expo 2020 has helped stimulate growth across different industries, including the real estate market within the UAE.

Amidst all safety measures, Expo 2020 welcomed more than 20 million visitors, introducing them to the UAE’s vibrant society, high standard of safety and quality of life.

There is no doubt the Expo 2020 has raised the profile of the UAE but also the region, setting the path for a resilient, long-term future for the UAE economy.

The so-called ‘Expo effect’, used to describe the continued positive impact that Expo normally has on the host country, is stretched over ten years, and long-term gains are yet to be determined.

Expo 2020
Image: Expo 2020 Dubai

Do you expect this impact to last throughout the summer and into the coming year?

The impacts of the economic outlook have promoted investment in the country and made the city an attractive place to live.

Foreign investors and visitors like what they see, and we expect the demand to sustain through the foreseeable future.

In addition, despite being widely perceived as a seller’s market, residential real estate in Dubai remains affordable with a prime capital value of $630, substantially less than comparable global gateway cities, driving the top end of the market, particularly for super-premium villas.

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