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Despite a slowing global economy, the United Arab Emirates’ real estate market is enjoying a bumper year thanks to a series of reforms and geopolitical events including the war in Ukraine, with some sectors expected to lead global growth in 2023.
In the third quarter of this year, the return on global commercial real estate turned negative for the first time since the beginning of the year COVID-19 Pandemic According to American Financial Corporation, in the second quarter of 2020 MSCI.
although Europe Facing their worst performance since the 2008 global financial crisis, the UAE smashed some personal bests.
In November, real estate transactions in Dubai surpassed the highest level since 2011, with more than 10,000 transactions worth $8.3 billion in the month, according to the Dubai-based real estate group property search.
At the same time, the annual contract rate increased by 7.5% year-on-year.
Prime Home Prices Dubai’Prices in affluent neighborhoods such as Palm Jumeirah, Emirates Hills and Jumeirah Bay Island are expected to see the strongest growth in the world in 2023, according to real estate consultants Knight Frank Middle East.
The affordable housing segment also saw growth.Developer under Abu Dhabi Capital Group Chance It is investing in a $4.03 billion residential project that is expected to accommodate 5,000 people, including middle-income earners and the ultra-wealthy.
investment tips
The UAE has recently taken deliberate steps to position itself as a safe haven for investment through various measures to build confidence in the form of foreign direct investment (FDI).
The country introduced its first long-stay visa, or golden visa, in 2019, allowing expatriates to live and work in the UAE without state sponsorship, retire and own 100% of mainland businesses.
Abu Dhabi named best city in the world for pandemic response and vaccination rollout in 2021, says London-based advanced analytics firm Deep Knowledge Group.
Dubai, which hosted the World Expo last year, has increased the number of hotels in Dubai from 711 to 759 between January 2021 and 2022, according to reports Dubai Chamber of Commerce.
A series of new economic reforms are moderating the growth of small and family-owned businesses, including law The goal last month was to turn 200 of them into large companies by 2030, with a market capitalization of more than $40.84 billion and annual revenue of $5 billion.
Real State of (Electronic) Warfare
The combined effect of all this increases the attractiveness of the UAE market for foreign investors, coupled with neutral position In global politics, welcome Russian wealth amid Western economic sanctions.
“The war in Ukraine and Russia is very good for the real estate market here. People see the UAE as a safe haven, a place where they can be welcomed,” said Izzat Dajani, chief executive of IMCapital Partners, a MENA-T investment management and corporate advisory firm in Dubai. Said, he told Al-Monitor FDI in the UAE Demographics are changing.
“Historically, there has been a lot of funding coming from the Gulf region, mainly from Saudi Arabia and Qatar, but also some from Jordan, Eastern Europe and Russia,” he said amusingly, explaining the difficulty of obtaining foreign direct investment data for the UAE.
But recently, he thinks that influx has dissipated.
“I don’t think there’s a lot of money coming from Saudi Arabia or Qatar (as it used to be). I think most of the investment actually comes from Russia, Ukraine and India, and some from countries like Azerbaijan and China,” said international law firm LANSKY, GANZGER , adds Dajani, Senior Specialist Advisor at GOETH, FRANKL + Partner (LGP).
Dajani said that the depreciation of the euro has resulted in less investment in real estate in European countries and other countries facing the same problem with other currencies compared to the UAE.
He noted, however, that with the war finally over, there may be a correction in the real estate market and consequent foreign direct investment. Dajani still expects overall positive sentiment to remain in place given the UAE’s strong leadership outlook.
“One of the best ways to stimulate foreign direct investment is through the privatization of successfully listed companies,” Dajani said, highlighting the UAE’s recent initial public offerings this year. In 2022, the UAE has witnessed Highest GCC product Raised $9.7 billion through five initial public offerings.
economic outlook
United Arab Emirates residential property The market weakened in 2014 and is facing a glut due to a three-year oil price slump, it said. Mordor Intelligence, and more recently due to the global pandemic. But it is recovering as people increasingly work and learn remotely from home and seek more space.
Rising inflation and interest rates globally, as well as in the UAE, have a direct impact on property prices, mortgages and foreign direct investment, and especially on affordability for middle-income renters and buyers. The luxury real estate sector for high net worth individuals and entities remains more resilient.
Property prices in Dubai expected to rise at a slower pace, according to September poll Reutersaccording to data from Asteco Property Management, Deloitte, Property Monitor, Morgan’s International Realty and ValuStrat, which noted that for housing in Dubai to be considered affordable, average house prices would need to fall between 5% and 20%.
According to Coldwell Banker Richard Ellis (CBRE), a global commercial real estate services and services company, in the year to November 2022, the residential market in Dubai will see a 9.5% rise in prices, with apartments and villas up 9% and 12.7% respectively. %. Investment agency.
“But for the first time, we’re going to enter what we classify as a global slowdown, rather than a global recession without a lot of inventories,” said Taimur Khan, head of research at CBRE. And more.
“In the past two economic slowdowns, we (the UAE) had a lot of vacancies, a lot of stock coming online and empty retail and office space. This time we have none,” he told Al-Monitor. “We are now behind the development curve.”
With demand so high, increasing the number of required developments is critical to the UAE’s recalibration strategy and growth, Khan said.
“The high-end market is seeing a lot of development, or the high-end market where you often see new developments coming out. But affordable inventory is key and a lack of inventory could be a challenge for future growth issues,” he said, particularly welcoming to the economy Expansion is critical for small and medium business owners and employees.
Khan believes that the UAE has realized this, with more convenient living projects such as Dubai 20 minutes to the citya transport infrastructure project that aims to have at least 55% of residents reach a public transport stop within 800 meters of their home and meet their daily needs by 2040.
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