Real Estate and Brand Dubai – Two Peas in a Proverbial Pod

A leading UAE property portal Bayut and partners unveil the truth

There’s no doubt that the post-Covid era has been a period of drastic change around the world. But with much of the global economy still reeling from the aftermath of the pandemic, it’s impressive to note how the UAE, and in particular Dubai, has bounced back with full force. Based on the data and trends seen on Bayut, the region’s preferred property portal, the real estate sector has had a significant role to play in pushing brand Dubai to the world. 

Over the past few years, Dubai has established itself as “THE” place to be, whether people are looking for long-term residency, a vibrant market in which to establish a business, or the chance to invest in lucrative real estate. From creating an investor-friendly ecosystem to introducing long-term and flexible visa policies, the emirate has ensured remarkable stability when it comes to cultivating a thriving economy.

These policies have also helped Dubai’s real estate sector to grow exponentially over the past year. One can see how that impacts the property market, where recent trends have shown an unprecedented spike in the demand for properties across the emirate – particularly in the rental segment. In Q1 2023, Bayut’s data showed up to 88% increases in advertised rental costs for properties in Dubai. In most cases these price hikes were consequent to either the ever-increasing demand or recent handovers in communities like Dubai Hills Estate and Downtown Dubai.

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“As the Managing Director of Espace Real Estate, I have had a front-row seat to the remarkable transformation and evolution of Dubai’s real estate market in the post pandemic era. As we look back on the past two years, the data speaks for itself – the residential sector, with its plethora of townhouses, villas, and apartments, has seen a considerable surge in transaction activity compared to the two year period immediately preceding the onset of the Covid pandemic.

However, the aspect that truly stands out is the astounding increase in activity within the luxury and ultra-luxury segment, specifically in properties valued above the AED 20,000,000 price point. In a comparison of the two years before and after the pandemic, there’s been a stunning 714% increase in transactions within this premium category.

In fact, if we look at the recent history of Dubai’s property market, it is clear that the post-pandemic era will be remembered as a turning point. It has been nothing short of a renaissance, a coming-of-age for Dubai’s luxury real estate market, which is now under the global spotlight like never before” – John Lyons: Managing Director, Espace Real Estate)

Even properties in traditionally affordable areas have recorded around 24% increase in advertised rental costs. The search trends we’ve observed this year show that centrally located, established neighbourhoods like Bur Dubai, Dubai Marina, Business Bay, Umm Suqeim and Jumeirah have been most popular among tenants.

“The early reopening of Dubai during the pandemic, along with an influx of new businesses, change in sponsorship rules, the instigation of the golden visa, job market recovery and increased tourist visits, have collectively contributed to the rising demand for rental properties and subsequent price increases.

Even affordable housing areas like Jumeirah Village Circle (JVC), Jumeirah Village Triangle (JVT), Sports City, Liwan, and Discovery Gardens have experienced moderate growth in rent prices. On one side we see end-users making lifestyle adjustments to cope with the price rises, however on the plus side we are hopeful of more and more tenants turning to homeowners utilising the flexible payment plans offered by prominent developers.” – Porush Jhunjhunwala: CEO, Banke International Properties.

It is interesting to see that despite the continuous hike in prices, there has been no adverse movement noticed in the demand for properties in these areas. The safety, economic stability, available property options and quality lifestyle that Dubai offers adds to its overall charm, making it one of the best cities in the world to live in.

A similar trend was observed for property sales in Dubai by the team at Bayut. Data shows that advertised sale prices for ready properties in Dubai have increased by up to 24%. As per the Dubai Land Department, a total of 30,767 sales transactions (ready and off-plan) valued at AED 87.9 billion were recorded between January and March 2023.

Over the course of the past 15 months, there has been a massive influx of foreign investment in the real estate sector. Besides Dubai’s investor-friendly policies, there are a handful of other catalysts, including lucrative rental yields, economic stability and long-term residence visas that have been driving this recent demand for investment properties in the emirate.

”Dubai’s flourishing economy has sparked a remarkable surge in families seeking to settle in the city, with relocation rates at their highest in nearly ten years. Consequently, the rental market is facing immense strain due to a notable scarcity of available properties across various market segments. This scarcity serves as a promising signal for future property sale values, with a projected lag of 2-4 years between initial relocation and the decision to purchase a permanent residence in the city. As a result, the demand for first-time buyers entering the market is anticipated to remain strong over the next five years.” – Aaron Lomax: Managing Partner, Treo Homes

Search trends on Bayut reveal that home buyers mainly preferred investing in areas like Dubai Marina, Jumeirah Village Circle (JVC), DAMAC Hills 2, Downtown Dubai and Palm Jumeirah. With most of these areas offering projected ROIs of 5% to 8%, it’s no surprise that these residential districts appeal more to investors looking for good investment opportunities.

Besides the ready properties, there has been notable movement in the off-plan segment as well. With most developers in Dubai promising reasonable handover timelines alongside flexible payment plans – the off-plan sector in Dubai continues to grow. District 10 in Jumeirah Village Circle, Urban Oasis by Missoni in Business Bay, Villanova in Dubailand and Alaya in Tilal Al Ghaf have been the investment hotbeds for off-plan properties in Dubai during Q1 2023.

“With the recent pandemic, people have realised the importance of a healthy and balanced lifestyle and ensuring financial security in a well managed and growing economy. This has led to a flourishing off-plan sector as demand has risen for homes that serve as both a permanent residence and relaxing retreat. Consequently, Dubai’s newly-released luxury waterfront developments have experienced significant upward market trends, offering residents an enviable lifestyle with stunning views of the Arabian Gulf, and fantastic ROI potential. Government initiatives, including long-term residency visas and relaxed ownership regulations, have further motivated expatriates to invest in properties, ensuring a continual boost and stability in the Dubai real estate market.” – Sunny Bhagnani: Off-Plan Sales Director, Aqua Properties

Based on the trends shared by Bayut, if we were to sum up the performance of the Dubai real estate sector over the past 15 months – phenomenal is the word that fits the bill. The sector has grown exponentially, with a steady demand fuelling it further to reach greater heights.

“I think there is absolutely no doubt that Dubai is experiencing a property boom unlike any other. Backed by a growing economy full of opportunity, not only has Dubai become a brand to be reckoned with, thanks to the safety, infrastructure, government support and overall positive outlook of the emirate, the city has also very successfully strengthened its hold as a popular metropolis, everyone in the world wants to be associated with. Lots of talented people from all walks of life across the globe are making their way to Dubai, because of its appeal as a place that’s full of opportunity!” – Haider Khan, CEO of Bayut, Head of Dubizzle Group, MENA.