Dubai Real Estate And The Global Market

Overview Of The Global Real Estate Market

The global property industry is divided into five regions according to geography: North America, Europe, Asia-Pacific, South America, and MEA. The rented property type has been leading in the property sector with an estimated market share of 53% for the year 2021. Sales, renting, and leasing make up the three segments of the worldwide real estate market.

In 2022, the size of the global real estate market was USD 7,063 billion. Moving ahead, IMARC Group projects that the global market will increase at a compound annual growth rate (CAGR) of 1.8% from 2023 to 2028, reaching US$ 7,954 billion. Some of the main market drivers are the expanding consumer spending power, an increasing need for residential homes, and the quickening urbanization.

American Tower Corporation, Aston Pearl Real Estate Broker, Ayala Land Inc. (Ayala Corporation), Cbre Group Inc., Colliers International, Gecina, Jones Lang Lasalle Incorporated, Prologis Inc., Reliance Relocation Services, SEGRO plc, Simon Property Group Inc., and Wanda Group (Dalian Hexing Investment Co. Ltd.) are a few of the major players in the international real estate market.

Dubai Real Estate Market: Current Scenario

When compared to the prior year, the emirate recorded sales increased by a significant 75 per cent in 2022, which is directly related to the increase in pricing. By the end of 2023, the real estate market is expected to reach AED 300 billion.

Growth and development of the Dubai real estate market- Dubai's real estate sector contributes approximately 5.5 percent of the nation's GDP, and it has been on the rise since 2022 as both rental rates and home prices have increased. The price of high-end houses in Dubai increased by the largest value globally from 6.9% to 7.9% in 2023 due to a higher demand for exquisite dwellings in these locations.

Considering this increase, the research states that daily transactions totaling over $270,000 are still being logged. Since a few years ago, the UAE has been creating waves in the international property market, and the pace of its development continues unabated. The UAE is setting the pace for the region's real estate market due to its positive economic forecast and rising trends in international property investment.

Factors contributing to the growth- The availability of water, green areas, and desirable spots are the three main variables influencing real estate values in Dubai, according to Realist’s Index. Particularly, neighborhoods with a lot of green space, like Dubai Hills, have had a significant influence on home values.

Building on the upward trend in the travel sector, UAE received 6.02 million foreign tourists in the initial four months of this year, a rise of 18 percent from the identical timeframe in 2022. This is evidence of the UAE’s expanding popularity as an essential destination throughout the world.

Market trends and recent developments- One of the main drivers of the market's development is an increasing need for residential real estate because of increasing urbanization and the higher disposable incomes of people. In keeping with this, the changing composition of people and the rise of nuclear families is an additional drivers spurring development. Additionally, the increasing customer desire for high-quality accommodation in an environmentally friendly environment is promoting market expansion.

Additionally, the expansion of the market is being favorably impacted by the combination of the Internet of Things (IoT) and artificial intelligence (AI) technology, which offers one system that can be used to automate various architectural activities, including electricity, safety measures, and control of energy.

The cost of living in Dubai has increased because of the jump in demand, with average residential prices in Dubai rising by 12.8% from March 2022 to March 2023. Over the same time, the average price of an apartment rose by 12.4%, while the average price of a villa rose by 14.8%.

Key players and buyers in the Dubai real estate industry- British nationals continued to lead the pack of purchasers in UAE in the first quarter of 2023, with a growth of 60% year over, based on statistics from Better Homes. The most influential 10 list also included people from India, Russia, Italy, Lebanon, Egypt, Turkey, France, China, and the United Arab Emirates.

Dubai Real Estate Investment Opportunities

Today, Dubai provides a variety of home investment choices, including both short-term investments and houses that are ready to move into.

Residential properties in Dubai- It said that for the entire year 2022, a record number of 90,881 residential transactions had been recorded, surpassing the previous record high of 81,182 from 2009. The price of high-end houses in Dubai increased by the largest value globally from 6.9% to 7.9% in 2023 due to rising interest in exquisite dwellings in these locations. Notwithstanding this increase, the research states that daily transactions totaling over $270,000 are still being logged. 

According to real estate consultant Asteco's Q1 2023 study, more than 32,000 residential properties in Dubai, including villas and flats, will be handed over by the end of 2023, demonstrating the expansion of the emirate's real estate sector and its post-pandemic durability.

Popular neighborhoods for residential investments- 

Top 6 Areas to Invest in Dubai Real Estate – 2023

1. Business Bay.
2. Downtown Dubai.
3. Dubai Jumeirah.
4. Dubai Marina.
5. Jumeirah Lake Towers (JLT).
6. The Greens and Views.
7. Za'abeel
8. Dubai Marina.
9. Dubai Hills Estate (Villas).
10.Jumeirah Beach Residence.

Types of residential properties available- There are many alternatives to pick from especially when it involves residential homes in Dubai. Apartments are the most popular and economical option. Villas provide additional room and seclusion, but maintenance costs can be high.

Townhouses provide more room and privacy than apartments without costing a fortune, while duplexes offer greater space without the high price of a detached home. Penthouses are the real thing for individuals looking for the height of luxury. Remember that the best decision will depend on your lifestyle, interests, and financial situation.

Factors to consider when investing in residential real Estate-

Before buying property in Dubai, keep reading to learn 10 things.

1. Dubai Place
2. Purchasing Off-Plan Property
3. Invest in A Used Property
4. Invest in Dubai Rental Properties
5. Buying a Freehold or Leasehold Property
6. Financing, Fees, And Major Expenses
7. Recognize the sales procedures
8. Keep Liquidity in Mind When Buying 
9. Real Estate Features and Amenities           
10. Property Assessment

Commercial properties in Dubai

In Dubai, the commercial real estate market is divided into several sectors based on type (offices, retail, industrial, logistics, multi-family, and hospitality), as well as important cities (Dubai, Abu Dhabi, Sharjah, and the rest of Dubai. The current market size and projection for the categories of the UAE commercial real estate market are provided in the study in terms of dollars (USD Billion). The UAE commercial real estate industry is anticipated to see a CAGR of almost 6% from 2022 to 2027.

Prominent commercial areas in Dubai-

Top 8 Commercial Areas in Dubai for Offices

• Business Bay.
• Dubai Hills Business Park.
• Dubai International Financial Centre (DIFC).
• Dubai Media City (DMC).
• Dubai Science Park.
• Dubai Silicon Oasis (DSO).
• Jumeirah Lake Towers (JLT).
• Sheikh Zayed Road.

Types of commercial properties available- Office types of commercial real estate in Dubai. In Dubai, there are both fully equipped and unfurnished offices, as well as coworking spaces, shops, warehouses, showrooms, villas, buildings, and factories.

Factors to consider when investing in commercial real estate- 

1- You ought to carefully read the agreement and have a lawyer analyze the conditions of the lease rather than depending on the landlord's lease agent for clarification.

2 - To negotiate the finest business, and rent feasible, work with a commercial property agent who only works for the tenant.

3- Be familiar with the operation of CAM charges, including yearly increments, cost stops, and determining the pro rata portion of square footage.

4- Demand that the property owner provides sublease and assignment provisions. 

5- The lease can be transferred to another tenant, with all or a portion of the space to be leased to a subtenant if the business doesn't proceed as expected.

6- Many landlords want company and individual assurances along with a commercial lease; thus, to fully grasp the dangers and obligations, speak with a commercial real estate attorney.

7-Try to get asset confidentiality, which forbids the landlord from renting to multiple tenants who work in the same industry.

8- The tenant has a first choice if more leased property becomes available thanks to the first right of refusal. If the property is up for sale, the renter may submit an offer or counter one.

Off-Plan Properties In Dubai

Real estate that has not yet reached the completion of construction is referred to as off-plan property. Property bought off the schedule is bought before it is finished, usually in the initial stages of development or even in the project phase.

Exploring the concept of off-plan properties- There are various procedures involved in purchasing off-plan houses. It begins with choosing appropriate projects and developers, going over the agreement and the conditions of settlement, and performing due diligence.

To reserve an apartment, purchasers often execute a reservation agreement and deposit a reservation fee. A contract of sale or purchase agreement is then completed, and the purchaser begins making consistent payments by the established payment schedule. Lastly, the buyer receives the title deed upon the project's completion.

Benefits and risks of investing in off-plan projects- Real estate in Dubai’s off-plan investments come with several benefits. First off, purchasers may reserve houses for less than the market value after construction is complete. Investors can also take advantage of flexible payment schedules, which frequently extend throughout the building duration.

Off-plan houses frequently include cutting-edge facilities and sophisticated creations, which attract interested tenants and buyers. Off-plan homes provide attractive opportunities, but they also come with certain hazards. Construction and project completion delays are frequent, which might affect the expected return on investment.

Property values can also fluctuate with the market, and there is a chance that the project won't live up to expectations or run into legal issues. Before committing to an off-plan property investment, investors should carefully evaluate these risks.

Prominent off-plan developments in Dubai- There are various things to think about before investing in off-plan buildings. Location is important since prime properties often have more demand and better potential for capital growth.

It's crucial to look at the developer's reputation, financial stability, and track record. Making an informed investment selection also requires knowledge of the market trends, growth estimates, and infrastructure development in the immediate region.

Dubai Real Estate And The Global Market

Influence of global market trends on Dubai real estate- More than 60% of units were sold altogether in the Dubai real estate market last year, with off-plan developments taking the lead. However, given the news of an impending worldwide recession in 2023, there is significant skepticism among the public concerning the economic health of the real estate sector.

The UAE economy is anticipated to maintain a stable GDP growth rate of roughly 5% in 2023, as forecast by the central bank for 2022, despite the opinion of some analysts that the UAE would avoid the recession, but with a slowdown. It's notable because it's lower than the 7.6% forecast for 2022 from the year before.

We'll look at a few of the most current repercussions of this slowdown and identify the things that should help property markets in the Emirates and Dubai weather this global economic downturn without too much difficulty. The most noteworthy development, however, is that Sheikh Mohammed just presented a startling $8.7 trillion economic plan that will aid the nation in fighting the worldwide economic downturn on a few fronts.

Factors that attract international investors to Dubai- The number of enterprises in the industry grows yearly along with the number of tourists visiting Dubai.

 The government's plan to keep the flow of foreign investment into the emirates includes tourists in UAE. Aiming to draw 20 million tourists annually and establish UAE as the top destination for travelers on both business and pleasure trips abroad, Dubai Tourism Strategy 2020 was introduced in 2013. This approach was expanded in 2018 to establish additional objectives to draw 21–23 million tourists in 2022 and around 23–25 million visitors by the year 2025.  Dubai attracts tourists from all over the world for its luxurious amenities and shopping.

1. The country's promise for both political and economic stability
2. simple licensing for businesses
3. There are several sectors in which foreign investors can invest.
4. High level of living and a luxurious lifestyle.
5. In the Gulf Cooperation Council and the Middle Eastern area, Dubai serves as a major trade hub.
6. Dubai's technology is among the greatest in the entire globe.

Comparison Of Dubai Real Estate Market With Other Global Markets

Properties in London have a few drawbacks as compared to Dubai, such as:

1. Low ceilings: the average flat has a 2.5-meter ceiling height. This provides the feeling that the space is constrained. New construction in Dubai, on the other hand, has rooms and apartments with high ceilings and expansive windows.
2. Not enough parking. Parking is still a challenge for city dwellers. In the Emirates, construction developments have subterranean parking, and residences have garages. There are no additional costs for parking for residents.
3. A complicated tax structure that adds to the expense. Rental income over $15,000 is subject to tax. The tax rate is graduated, with the first level being 20%.

• Among the nation's most costly towns is New York. A dwelling square meter typically costs $17,000.
• For $ 272,000, a property may be acquired in Dubai. The initial cost in the USA is $650,000. In January 2021, analysts predicted a 6.5% fall in sales, but new house sales plummeted by more than 18%.
• The average cost of living in Australia ($2104) is 40% higher than in the United Arab Emirates ($1498). In the list of the world's most expensive countries, Australia ranked 11th versus the United Arab Emirates 28th.

Conclusion

Demand Must Withstand Global Economic Pressures, prices are projected to normalize after roughly 40,000 units are delivered in 2023, while the increase in developers.

Due to the various new structures and developments that are now being built surrounding the city and the stable economic environment supported by government policies and initiatives, the future of the Dubai real estate market is promising. All nations in the globe, including Dubai, have had challenges in the years 2022–2023, but Dubai keeps recovering and continues to astound everybody.