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Experts have begun to make more or less specific predictions about how Dubai's real estate market will change in the remaining six months of 2023. There were general forecasts that the market would grow. Recently many additional assumptions backed up by statistics have been added to them.
Content:
- Where will new housing appear?
- Rent regulation
- A different calculation of the index
- Off-plan properties are in high demand, but not forever
Where will new housing appear?
Analysts estimate that 35,000 more apartments and 6,800 more villas will be delivered in Dubai by the end of 2023. New real estate will appear in all areas of the emirate, but the following communities can be highlighted in particular:
- Downtown Dubai is a popular neighbourhood with luxury real estate;
- Business Bay - an area with a large selection of apartments in high-rise buildings;
- Jumeirah Village - a housing estate consisting of six districts with a great variety of properties.
Experts emphasized three areas under construction in the emirate, where a lot of new real estate will appear by the end of the year.
- Mohammed Bin Rashid City (aka MBR City) - a freehold community under construction in Dubai, one of the most significant new districts;
- Dubai South, an area with the most significant Al Maktoum international airport;
- Dubai Creek Harbour, a large high-rise housing estate in the coastal area.
Mohammed Bin Rashid City will grow the most in 2023. Developers plan to deliver 10,000 apartments there.
Rent regulation
The first half of 2023 saw an increase in rental yields. And while this was good news for investors, it was only sometimes suitable for tenants. So Dubai authorities will try to regulate rent growth.
The Dubai Land Department (DLD) uses the so-called rental index to calculate the growth of rents now. Depending on the property's location, they determine how much the rents may grow.
A different calculation of the index
The new rent index will be calculated in a completely different way. It will consider the quality of life and convenience of infrastructure in various buildings. Estimates will form the final rating in "stars". For example, a building with a maximum possible rating of four stars will be considered "ultra-luxury". Property owners will not have any restrictions on rent increases in such constructions.
Restrictions will affect less advanced buildings. If a house is "unpopular" with the people, the owner must obtain a permit from the Real Estate Regulatory Authority (RERA) to increase its rent.
At first, the innovation will only affect apartment buildings, but later it will also apply to villas. People wonder how it will affect the rental yield. So far, the general forecast is that the average rental cost will continue to grow in the second half of 2023, but its growth rate will be significantly reduced.
Off-plan properties are in high demand, but not forever
The growing popularity of off-plan real estate became a noticeable trend in the first half of 2023. For example, there were 4,824 off-plan apartment deals and 1,137 off-plan villa deals in May. That's 103% and 30% more than in May 2022, respectively.
By comparison, there were 4,038 ready-to-move-in apartment deals and 877 ready-to-move-in villa deals in May 2023 (74% and 57% more than in May 2022).
Many believe the off-plan real estate market will continue to grow impressively and dominate finished projects. Others think this success will be short-lived and the new trend will come to nought before the end of the year. In the meantime, considering the popularity of off-plan projects, experts advise investors to choose developers whose projects they plan to invest in very carefully.
