The UAE real estate market is witnessing a major shift in buying behavior as a result of the Covid pandemic, which has extended into the first quarter of the year.
The property market is now witnessing a greater preference for completed residential units, rather than on off-plan units.
This is reflected in the sales seen through the first quarter of the year, with 70 percent of overall transactions focused on finished units, according to data released by the Dubai Land Department.
In line with these trends, homegrown real estate developer ZāZEN Properties has revealed key insights on the UAE residential markets based on the recent updates in the industry, especially over the last few months.
Rental rates are rising across the country, while real estate demand continues to boom.
The co-founder and COO of ZāZEN Properties, Madhav Dhar, said: “As per the Dubai Statistics Center, the population in Dubai was just over 3.5 million people as of April 2022, with a target of 5.8 million people by 2040, and the city is ready for this growth.
“Whether it is apartments or villas, the city is bustling with constant new developments and is ready for the growing population. A very large number of new apartment buildings, villas, and townhouses are being developed in 2022 and in the coming years, and are all aligned with Sheikh Mohammed bin Rashid’s 2040 Urban Master Plan in mind, which aims to transform the emirate, and make it more sustainable and interconnected.”
Key trends in the UAE real estate market during 2022 include:
- More end users continue to buy across the city due to low mortgage rates
- Buyers are looking for larger living spaces in low density communities
- Average sales price has increased 11 percent in the first quarter of 2022, mainly due to premium villa sales
- Ready apartment buildings with larger spaces and a strong community offering also performed well as stock of ready villas depleted
Changing demand: Apartments vs villas
Apartments currently account for the majority of total completions in the first quarter of 2022, as the supply of new villas are limited due to lack of stock and pipeline.
Villa stock in prime Dubai areas is limited and 2022 will see only a 3.6 percent of planned deliveries in prime submarkets, keeping prices at the higher end.
Over 10,000 new townhouses and villas have been launched in May 2022 by large developers but handover for these developments is not expected until between the end of 2024 and 2025.
Of the villas being developed, 30 percent of them are in luxury communities that have golf courses, like Dubai South, Dubai Hills and Arabian Ranches 3, and only 5 percent are being developed in prime market locations, which will help prices in those areas stay strong.
The high supply of villas and townhouses in the coming years will result in a drop in prices below the AED 5 million mark.
Dhar concluded: “Thanks to the leadership of Dubai, the city has become a true global destination, a business hub and a secure home base. People around the world now realize that if and when a new pandemic hits, or if there is economic or political turmoil, Dubai is the best city to be in as we have witnessed over the last couple of years.
“Additionally, the recent updates to the UAE Golden Visa regulation is just another great initiative that will spur investment into real estate even more, especially with the flexibility that these new rules have to offer, providing residents with a strong reason to invest in the country long term and allowing non-residents to make UAE their second home.”