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Over the past several years, the first-hand real estate was the market leader. More specifically, the two leading sectors were:
- Elite new buildings, mainly villas and other large properties;
- Off-plan projects, i.e. projects under construction, with low investment prices, flexible payment plans, and high returns on investment.
In the vast majority of cases it is about residential real estate. Commercial premises began to show signs of life only in the last couple quarters.
Content:
- Overall market performance at the beginning of the year
- Explosive growth of the second hand real estate market in the first quarter and in April of 2022
These categories dominated in 2020 and 2021. Due to the extremely active growing demand, the “rally for villas”, and the flow of wealthy foreign investors willing to make long-term investments, the supply of all mentioned properties has been seriously run out.
With the unjustified price rise for short supply from the premium sector, the economic recovery, and the return of foreign businesses, workers, and tourists to Dubai, second-hand real estate began to rise to first place. This included apartments, villas, townhouses, and even commercial premises.
These results were recorded at the end of the first quarter of 2022.
Overall market performance at the beginning of the year
One of the main reasons for the secondary market boom was the huge influx of foreign investors from Europe: Great Britain, Italy, France, and Germany. They are followed by wealthy Russian and Ukrainian investors.
In a couple of months, the Russians were able to increase the number of purchases by 67% in annual terms. This resulted in an immediate climb from the seventh to the fifth place on the list of the largest homebuyers.
Investors from China are enhancing their field presence in the table of the largest buyers of real estate. Traditionally, buyers from India and Pakistan represent a large share. Buyers from Lebanon distinguished themselves too.
At the same time, the UAE Government reformed visa regimes for foreign investors, businessmen, workers, and various artists. The Government introduced new types of visas, such as the "Green" 5-year visa for artists, qualified workers, and even freelancers. Other visa programs have also been reformed.
In the first quarter, Dubai issued new legislation for licencing and regulating the crypto market. International giants like Chinese Binance and FTX Europe received licenses to operate in the first week since the announcement of the new regulation.
In general, for the first quarter of 2022, the local market set several historical records at once. For example, the highest volume of real estate transactions since 2010 (approx. 20,539 sales transactions for USD 15,100,000,000). The most expensive villa in the history of the emirate was sold for more than USD 76,000,000.
The dominance of European investors
Let us return to the topic of foreign investors and buyers. The following categories are the most promising foreign investors for the Dubai real estate market.
First of all, it is necessary to point out the citizens of Britain. They took the first place in the list of the largest homebuyers by nationality. They are followed by citizens of India. Traditionally, they have a large population in the emirate. Italian investors and buyers close the top-3.
It has already been stated that the Russians have moved from the seventh to the fifth place in the ranking. At the same time, the French took the seventh place. And buyers from Pakistan follow them.
Chinese and Lebanese citizens have already been mentioned, but North American buyers, especially Canadians, are also worth noting. From the first quarter of 2021 to the first quarter of 2022, the number of buyers from Canada increased by 116%.
So, taking into consideration buyers from Germany and Ukraine, buyer interest in the Dubai real estate market is dominated by Europeans or US and Canadian residents.
Explosive growth of the second hand real estate market in the first quarter and in April of 2022
At the end of April, according to available sources, the share of real estate sales in the secondary market reached 58% of all sales transactions in the emirate during this period. For comparison, in the fourth quarter of 2021, all sectors, except for off-plan units, took a market share of 55.9%.
April 2022 was the second most successful April on record in terms of real estate transaction volume. 60% accounted for the secondary market units and the primary market units took 40%.
Thus, the secondary market grew by 46% in volume in annual terms and by 67% in the total transaction value. Including March, this market segment registered two record months in a row.
What comes next
According to all available information, the increasing trend will continue in 2022. This, in general, applies to the entire market.
In April, there were 7,009 sales transactions worth USD 4,980,000,000. According to the Dubai Land Department (DLD) analytics, this is the highest level for April since the same period in 2009.
In terms of sales of villas and townhouses, Arabian Ranches 3 (note: off-plan units) and Dubai Hills Estate (note: the secondary market) are the leaders. This reconfirms the emerging tendency in the migrating of buyers' interest from the traditionally popular central areas of the city further towards the suburbs.
Overall, market analysts also predict a noticeable increase in ROI for the Dubai market. The villa segment will continue to do everything for the market, but the growth rates will gradually decline and stabilize. On the contrary, apartments are only gaining momentum in demand, price growth, sales, and rentals.
