Anecdotal evidence suggest that the majority of property buyers are UAE citizens and residents.
Sales transactions in Dubai’s real estate market, that hit a serious setback when the world went into lockdown last year, have been breaking records during the last several months. Off-plan residential units in some development projects have been snapped up within several hours, while ready-to-occupy homes have also been selling extremely fast.
But who is buying all these units? It might seem a bit odd that so many homes are being sold when millions of people have lost jobs because of the COVID-19 pandemic.
Despite the economic slowdown, many private individuals based in the UAE or other countries can still afford to purchase a new property. And many of them have seized the opportunity of low prices and attractive loan-to-value (LTV) ratios, while others have been encouraged by the government initiatives that aim to make Dubai an ideal place to live and work.
'Anecdotal evidence suggest that the majority of property buyers are domestic, UAE citizens and residents, many of whom are first home buyers taking advantage of the historic low prices,' explains Haider Tuaima, head of real estate research at ValuStrat.
Tuaima pointed out that sales transactions started to increase in the third quarter of 2019 but it was interrupted by the pandemic and mobility restrictions. After precautionary measures had been eased, buyers started to return to the market.
Customers purchase homes paying for it in cash or through a bank financing. In the secondary market property buyers take out mortgages, which has become a notable trend.
'Nearly 81 percent of the transactions year-to-date are mortgage transactions. We are seeing most of these buyers being end-users as residents are increasingly looking to climb the property ladder and after years of waiting on the sidelines, going ahead with their investment decision-making,' said Prathyusha Gurrapu, head of research and advisory at CORE.
'A host of reforms, including long-term and remote working visas, 100 percent ownership for foreign entities, fiscal incentives, the highest rate of vaccinations in the world, an increase in mortgage loan to value ratios and a declining dollar have led to an uptick in market sentiment and price recovery,' she added.
In the prime and ultra-prime residential segment, the market is witnessing an influx of affluent foreign buyers, who can easily afford to spend millions of dollars on a luxury villa or penthouse.
From January to around May 2021, 81 villas on The Palm Jumeirah alone, each costing upwards of USD 2.7 million, were sold. In April, a property on the island worth USD 30 million was transacted.
'With further relaxation in ownership and visa regulations along with a pro-business environment, many affluent buyers are investing in Dubai,' said Gurrapu.
Dubai has been one of the top destinations for global wealth. According to New World Wealth, approximately 1,300 high-net-worth individuals (HNWIs) migrated to the UAE in 2019, which is 2 percent more than in 2018.