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The independent analytical agency Knight Frank conducted another study regarding Dubai real estate. Faisal Durrani, head of the Middle East Research Department, suggested that high demand from foreign investors is largely contributing to the increase in prices for premium housing stock. The current situation is not yet final. There is an assumption that the upmarket properties will rise in price by at least 15% in 2022.
Content:
- Why Developers Can't Meet Buyers' Demand
- 2022 Could Become a Peak Year for Luxury Real Estate Sales
- Prices are rising
Why Developers Can't Meet Buyers' Demand
The explanation is quite simple: developers just can't keep up with the growing demand. For a long time, construction processes were hampered by the global pandemic. Now the lockdowns are over and investors are pouring into the Dubai real estate market, and developers just have nearly nothing to offer them. The upmarket areas of the sought-after emirate have a limited territory; it is far from possible to build a new construction in any place you like. Besides, the construction process requires a certain amount of time. In many ways, the Russian-Ukrainian conflict contributed to the increasing interest of investors. The lack of stability gives rise to the desire to invest in real estate in a country with a rapidly developing economy.
2022 Could Become a Peak Year for Luxury Real Estate Sales
Transactions with a total value of $10,000,000 or more are of no surprise any more. Knight Frank's chief consultant says that during the 1st half of this year only, 82 transactions worth over $10,000,000 have already been registered. In 2021, there were only 93 transactions with premium housing purchasing. Therefore, in 2022, sales may well overtake the last year’s results by almost half.
Foreign Investors Prefer Luxury Properties
Citizens of the UK, India, and the Gulf countries dominated among real estate buyers. Real estate is no less in demand among residents of the United States, Austria, and Switzerland. Foreign buyers are attracted by rent growth and housing stock capitalization.
Prices are rising
Knight Frank believes that premium real estate units’ prices could rise by 15% during a year, but the figures will not exceed 7% in the rest of this real market segment. Villas are most sought-after among the premium properties. During the year, the increase in sales prices for this kind of property reached 19.3%. And this is an average figure. The growth registered in the Palm Jumeirah community was over 50%. And the growth rate exceeded 30% in District 1 and Dubai Hills. The rate of increase in value is declining, but not stopping. Therefore, it is better not to put off investing in real estate in Dubai. Most likely, it is too early to talk about market stabilization, as well as a “bubble”. As long as buyers create the demand, prices will get higher.
