11.04.2024 19.04.2024 1406 0 0
Prices for apartments in new buildings under construction in the UAE have been steadily rising over the past years. Dubai and Abu Dhabi remain the most attractive investment destinations for foreign buyers. This article analyzes the country’s new real estate market, presents expert recommendations that contribute to the conclusion of profitable deals.
Current statistics of the UAE real estate market
Let’s look at the statistics of the real estate market using the example of the 2 most actively developing emirates of the country.
Abu Dhabi
According to the Department of Municipalities and Transport (DMT), Abu Dhabi recorded a significant increase in total sales of both residential and commercial stock in 2023:
- The volume of transactions reached a record 13,298 compared to 7,602 in 2022, which shows an increase of 75%.
- Residential real estate accounts for 97% of the total volume of transactions and about 85% of their total value.
- The total value of transactions amounted to 44 billion AED, which is 120% more than 19.9 billion AED in the previous year.
This growth reflects an increase in investor confidence in the Abu Dhabi market and is the result of government efforts to improve the investment attractiveness and infrastructure development of the emirate.
Dubai
In 2023, the number of registered sales transactions in Dubai reached 133,134, which represents a significant increase compared to 96,459 signed contracts in 2022. This growth (by 38%) was a record for all time, especially due to the outstanding results of unscheduled transactions.
During the year, purchase and sale agreements were concluded in 178 districts of Dubai, with 55.2% of all transactions in 10 key communities. In 2023, a record number of transactions were registered, the amount of which reached 411.74 billion AED, which is significantly higher than in 2022 (264.34 billion AED). The market value of sales agreements increased by 56% compared to the previous year, setting a new record.
Prospects of the real estate market in the current year
“Dubai, a key commercial and tourist hub in the Middle East, is expected to see an increase in average house prices by 5-7%, while Abu Dhabi is projected to see a 3-5% increase in value,” says Haider Tuaimah, director and head of real estate research at ValuStrat.
According to him, in the next 3-4 months, the real estate market in Dubai will continue to demonstrate strength in terms of transactional activity, price growth and rental rates. However, by the middle of the year, presumably in the summer, a turning point may come, which will primarily affect the segment of luxury housing. It is unclear whether this will lead to market stabilization or price adjustments. However, there is a high probability that the dynamics of the elite facilities sectors will change.
New projects are expected to be commissioned this year, but demand for them will exceed supply, which, according to analysts, will support the price level.
Developers plan to launch 120,000 units in Dubai over the next 5-6 years, with an annual commissioning volume of 20,000 to 30,000 units, while in Abu Dhabi, according to Mr. Tuaimah, 5,000 units are planned.
“The prospects for the Dubai residential real estate market for 2024 are assessed as positive due to the steady interest from both local and international investors,” said Nick Whitty, Executive Director of Chestertons Mena. He expects that demand will lean in favor of ready-to-move real estate compared to properties under construction, as they “provide a faster return on investment due to the possibility of immediate rental,” he added.
Expert opinions confirm the fact that apartments in new buildings in Dubai remain a potentially profitable investment for foreign buyers.
What to consider when choosing and buying real estate in the UAE
Before making a decision to buy a foreign home, it is important not only to study the market in detail, its trends and offers, but also to have a clear plan of action. Below are expert recommendations covering not only the process of choosing an apartment in a residential complex in Dubai, but also the main points related to owning a property:
- Determining the purpose of the purchase. It is important to have a clear idea of whether you want to purchase apartments for your own living, resale or rent. If the goal is to live in an acquired property, you need to choose the type of property that best meets your specific needs, whether it’s an apartment, townhouse, private house or villa in a low–rise area of Dubai. For families with children, it is important to have playgrounds, kindergartens and schools nearby. When buying a home for rent, the interests of potential tenants should be in the 1st place. They prefer new facilities near the beach or popular attractions with developed infrastructure and amenities.
- Determining the market value. The easiest way to do this is to calculate the price per square meter, taking into account that some developers may include the area of balconies and technical rooms in it.
- Understanding the difference between primary and secondary markets. The UAE is actively developing the real estate sector, offering a wide range of both new buildings under construction in Dubai and secondary housing. The primary and secondary markets differ in terms of equipment and quality of communications. Objects on the secondary market require increased attention, since the technical condition of the housing may not correspond to the declared characteristics.
- The purchase of housing in the UAE should be carried out after a personal inspection of the object or through a trusted real estate agent. The legislation allows you to make purchases online if you have a qualified realtor. It is important to familiarize yourself not only with the object, but also with the surrounding infrastructure, given the proximity of tourist locations, which can be an advantage for young people and a disadvantage for families with children and pensioners. Getting complete information about the building and the surrounding area is a prerequisite before purchasing.
- Accounting for the costs of completing the transaction and further maintenance of the property, especially if the secondary market is being considered.
- Careful selection of an intermediary is the key point. Using the services of a licensed agent with extensive work experience and positive customer feedback increases the chances of a successful transaction.
The main risks associated with the purchase of foreign real estate
The main risk for foreign investors lies in the lack of information about the chosen location and misunderstanding of local legislation. There have been many changes in the UAE in recent years, so it is extremely important to seek advice from a licensed realtor specializing in the region of interest before making decisions.
At the same time, the main opportunity for investors lies in the potential for a significant increase in invested capital through the purchase of an apartment in Dubai or other popular emirates of the country. The UAE is one of the leading countries where the cost of housing is growing at the fastest rate, attracting a huge number of tourists and expats, which contributes to a high return on investment. In addition, buying a home can be the basis for obtaining a so-called golden visa, granting the right to permanent residence, which remains important if you plan to relocate.
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