Investments in overseas real estate are interesting both for those who plan to move to the UAE and for potential investors. The housing in the United Arab Emirates is in high demand among foreigners. The most popular destination for foreign property buyers is Dubai. It is a metropolis with a highly developed infrastructure and a wide range of real estate offers both among new projects and secondary housing. Studying the local real estate market allows you to purchase real estate in Dubai and other regions of the country with maximum profit. In this article we discuss the most popular property options and market trends suggested by real estate experts.
Table of contents:
- Recent changes in the country's real estate market
- Resale property versus new projects
- Buying property by foreigners
- Apartment prices in the United Arab Emirates
- Villa and townhouse prices
- Average cost of housing per square meter
- Housing market prospects
- Return on investment
- We help you choose real estate in the UAE
Recent changes in the country's real estate market
The maximum growth in sales was reached at the turn of 2011-2012, when the rise in house prices in the UAE exceeded several tens of percent. Later, the situation with the global economy worsened, affecting the cost of oil. As a result, the amounts in sales announcements began to fall and, despite various positive shifts in 2015-2016, when different market segments tried to grow on their own, no one could overcome the general trend of decline. The reasons are different including an oversupply in the market. The pandemic has also had a direct impact on demand like closures and uncertainty about prospects have reduced the number of investors. Radical changes occurred at the beginning of 2021 when the cost of residential properties began to rise. Experts identified several possible reasons for these changes:
- Cancellation of lockdown and normalization of the situation with coronavirus thanks to total vaccination. When this text is published, more than 21,000,000 doses of the vaccine have already been sold in the UAE. It is more than twice the total resident population of the Emirates.
- Favourable conditions for expats. The authorities are developing various programs to attract foreign investments, including simplified schemes for obtaining visas for different categories of applicants.
- Stabilizing the economy. The UAE has long ceased to depend on oil production. The country has long struggled to diversify its economy and now has more opportunities to develop, ignoring oil export prices. Technological development increases employment and generates demand for housing.
Resale property versus new projects
Many foreigners from different countries who have already moved to the UAE or have invested in the local housing explain their choice by the following reasons:
- With the total control over the construction process and financing of its stages, there is still a risk that the delivery of your off-plan property will be delayed.
- Buying an off-plan property does not allow you to apply for a resident visa until the property is completed and is ready to move in. Buying an apartment or house worth over EUR 229,258 allows you to obtain a three-year visa if you pay for the property in cash.
- Property liquidity. While homes sold off-plan acquire the final value only after they are finished, secondary units are sold at market value. This increases liquidity in cases where the house needs to be resold shortly after the purchase.
Buying property by foreigners
The United Arab Emirates consists of seven emirates, each with a large city. Expats should remember that they cannot purchase real estate in every emirate. Even the largest cities in the state have communities where only leasehold ownership is available. Its maximum duration is 99 years and the lease rights are transferable to third parties. However, most investors prefer a net purchase scheme, which ensures more confidence in potential returns and liquidity. The number of foreigners allowed to own houses is very high. It allows you to choose any real estate in the UAE you like.
According to experts who took part in the Cityscape summit, the prospects for 2022 are even broader. The UAE has every chance to become an economic center of attraction for investment flows from abroad with a potential of up to $ 450,000,000,000. In the third quarter of 2021, there were about 56.6% of transactions in secondary real estate. According to a report from the Dubai Land Department, it is 14.67% more compared to the second quarter of the year. 9,017 transactions involving secondary ownership totaling AED 28,850,000,000 were made in the secondary UAE market.
Apartment prices in the United Arab Emirates
The pricing directly depends on the specific emirate, the location of the apartment, its area and amenities. The following average figures of housing can be observed in the secondary market:
- A 1-room apartment in Dubai can be bought for 130,000 euros. In Abu Dhabi, the price of a studio apartment is 150,000 euros.
- 2-room apartments in Dubai cost from 250,000.
- The cost of villas averages 200,000 euros and can reach several million. This pricing policy also covers penthouses. Housing offers are available in Abu Dhabi for up to 40,000 euros.
This demonstrates a significant range of prices, allowing you to choose between low-cost housing and luxury properties. With the seeming economic crisis, luxurious options are becoming more and more popular.
Villa and townhouse prices
In this segment, the cost also varies significantly and depends on the location and living space. The increase in demand for detached houses has led to higher prices and the largest deals in the last few years. According to the Bayut & Dubizzle report for the 3rd quarter of 2021, the price increase varies from 1 to 7% for inexpensive villas and up to 7% for premium properties.
In Dubai, you can buy a villa in the price range from 185,000 euros to 21,000,000 euros. A townhouse in Abu Dhabi can cost you 287,000 euros. Sharjah offers similar prices. You can buy a 4-bedroom townhouse for 381,000 euros.
Average cost of housing per square meter
The United Arab Emirates offer property prices per square meter than major cities in Europe and the United States. This allows you to purchase apartments of a much larger area for the same cost than in London or New York. The average cost per square meter in New York is $11,800. In London, this price reaches $ 20,800.
These are apartment figures for large metropolitan areas while prices in the rest of the emirates may be lower. It should be borne in mind that the average cost is obtained by adding up the price of the most expensive and cheapest properties so you can choose housing for any budget.
Housing market prospects
Experts predict a further rise in prices from 1 to 4%, depending on a certain area and a type of property. 2021 showed an upward trend in demand for detached houses. This was caused by the pandemic with its closed borders and self-isolation. It is easier to spend time where you can enjoy a wide range of amenities and access to nature.
For the same reason, apartments with panoramic windows and a terrace or a spacious balcony have become more popular. Increased attention is paid to the infrastructure of residential projects. People taught by the restrictions during a pandemic prefer to have a sports club, a sauna, a supermarket in the immediate vicinity. The more developed the infrastructure, the higher the demand for housing and its price.
Analysts believe that the main rise in prices will affect the two largest emirates in the country:
- Abu Dhabi is growing rapidly, expanding its territory and increasing the number of jobs. This contributes to the demand for housing.
- Dubai, due to Expo-2020, expects an influx of tourists. The event will affect all spheres of life, push forward the development of different industries and research. It is expected that more and more expats will move to the emirate for permanent residence or work.
Jan Albert, the CEO of one of Colliers' regional divisions, noted the staggering growth of real estate investment in the UAE. According to him, " The country has the potential to attract at least $350,000,000,000 in foreign investment, with a return of about 5% on capital growth."
Analysts also note that in accordance with the state's development plan for the next 20 years, the number of new projects in the central part of Dubai will be reduced. The reason is the limited land plots. Therefore, ready-made houses will be in high demand.
Return on investment
Resale properties in the UAE offer great opportunities. While the apartments in new buildings in Dubai, as the leading UAE region are often offered under the off-plan program, secondary apartments are ready to move into. There is no need to wait when the construction will be finished and there are no risks of long-term construction. The transaction is completed within a month and the buyer gets the title deed after which he can lease the property.
We help you choose real estate in the UAE
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