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The Return on investments (ROI) rating of Dubai real estate showed significant changes over the past 6 months. The emirate has already recovered from the pandemic and continues to grow. The growth of the consumer base, investors and business activity is recorded in the region.
This has led to some notable changes in the market and opened up new investment opportunities.
Content:
- The best ROI left central city areas
- Off-plan real estate is smoking
- Expo 2020 impact
- General market indicators
The best ROI left central city areas
The sharp increase in the return on investments (ROI) is noticeable especially in the off-plan real estate segment (properties under construction). At the moment this asset category is experiencing the payback growth which has not been recorded since 2014.
But the main change is the migration of the highest ROIs from popular areas such as Downtown Dubai and Dubai Marina to the suburbs, for example:
- Sports City;
- Jumeirah Village Circle;
- Arjan;
- Arabian ranches;
- Al Barsha.
Off-plan real estate is smoking
Despite the fact that prices for the off-plan real estate grow strong with high price competition, they also remain extremely attractive in comparison with other world markets. Thus, the price of 1 m2 in Dubai is $5,500 on average, while it exceeds $11,000 in Paris or Sydney.
Sales of off-plan apartments brought $3.1 billion in total in terms of consumer demand in the fourth quarter of 2021. The total amount of apartment deals was only $2.6 billion in the third quarter of last year. The number of deals increased from 4,305 to 5,303.
Expo 2020 impact
The World Expo 2020, that has been taking place in the Emirate since October 1, 2021, is drawing to a close. Its impact on the market is hard to overestimate. 23,739 real estate deals have been made for a total of $17.2 billion since the beginning of the exhibition in Dubai. If we divide these purchases between primary and secondary markets, then the secondary market provides 13,120 deals worth $11.2 billion, and the primary - 10,619 deals worth $6.05 billion.
General market indicators
Dubai real estate price Indices show that current prices are only 20 points away from base indicators in 2014. For one month, from January to February 2022, the cost of villas increased by 2.1% approximately, and the cost of apartments - by 0.5%.
The high flow of consumers and investors was recorded in February. They showed interest not only in buying and renting out real estate for short-term, but also for long-term.
Rental rates for Dubai apartments increased by 4% on average for the entire fourth quarter of 2021. It is again the highest growth since 2014.
Buyers flow
Clear information came from the UK. Real estate agencies report that requests to buy property in Dubai have risen by 20% in the fourth quarter of 2021 and the first quarter of 2022. This is particularly true for off-plan real estate. Only in January of this year deals for this type of real estate amounted to $1.4 billion.
The focus of consumers attention shifted to long-term investments. The growth of business activity affected it last but not least. New companies are open, many business representatives, highly qualified workers and specialists from education and health care come to the city.
The UAE showed results above average in the Safe Cities Index published by The Economist. The UAE took the 16th place out of 190 countries for the ease of doing business and its safety according to the World Bank In 2021.
