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Dubai’s off-plan boom propels UAE realty sales to $124bln

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  • With Dubai’s population rapidly growing, demand continues to exceed supply

Dubai’s off-plan boom propels UAE realty sales to $124bln

Dubai’s resilient off-plan real estate sector, which recorded impressive growth for the past four consecutive years, has propelled the overall UAE market to hit Dh455.7 billion in sales in 2023.

With demand expected to outstrip supply going forward, the off-plan sector looks set to bolster the overall market’s growth in 2024 and beyond, realty experts said.

Madhav Dhar, chief operating officer and founding member of Zazen Properties, said despite the completion of over 60,000 units, demand continues to exceed supply with Dubai’s population rapidly growing to rank among the fastest globally.

In 2023, Dubai was a notable bright spot, benefiting from a flourishing tourism sector that increased home demand and witnessed a sales value of Dh160.46 billion, a 72.3 per cent growth compared to the Dh93 billion sales values seen in 2022. “Furthermore, 68,783 off-plan sales transactions were logged in 2023, reflecting a 59.4 per cent increase from 43,151 in 2022, and the greatest yearly performance for this segment to date,” the property developer said in a statement.

“The UAE’s visionary decision to eliminate the Dh1 million down payment requirement for the golden visa program will strengthen Dubai’s real estate landscape. This bold move not only enhances accessibility for current and new investors by enabling them to cement Dubai as their secondary home or primary base but it also injects fresh vitality into the market by allowing them to take advantage of world-class infrastructure and global connectivity,” said Dhar.

He noted that the UAE has positioned itself as a global leader in fostering a resilient and competitive real estate sector by facilitating easier entry for investors and stimulating demand. “This forward-looking policy underscores the country’s dedication to innovation and growth and we anticipate this change to have a profound and positive impact on the industry, paving the way for a new era of opportunities and sustainable development,” said Dhar.

Realty experts said the UAE’s recent move to scrap the Dh1 million down payment requirement to qualify for a golden visa through real estate investment would open the door for thousands of investors to more easily access the country’s popular visa programme. “Not only will this incentive benefit the nation’s economy but it will also play an instrumental role in boosting the UAE’s real estate sector value and likely see developers ramp up their already unprecedented pace as it relates to the construction of new projects.”

In Dubai, off-plan transactions comprised the majority of property sales in the third quarter of 2023, accounting for 65 per cent of the total sales value, which amounted to Dh13.62 billion. Out of the total property sales volume, 61 per cent were attributed to off-plan transactions.

Analysts said Dubai’s off-plan market has experienced a rebound thanks to strong governmental initiatives and investor interest. They believe that new technologies such as virtual reality property tours and blockchain are reshaping the off-plan market by enhancing transparency and efficiency. Investor behaviour and sentiment also play a significant role in the success of the off-plan market.

Analysts said the current trend of rising mortgage rates has altered the viability of purchasing ready properties for investment purposes. “Despite increased rental yields, the costs associated with servicing a mortgage have surged, resulting in diminished net yields after factoring in all expenses. Therefore, it is a great time to invest in off-plan properties for several reasons.”

Due to the rising mortgage costs, the economics of investing in ready properties for returns have become less favourable. Off-plan investments, on the other hand, offer a distinct advantage by enabling investors to allocate funds toward properties still available at their original prices, analysts argue. “While the flexibility of payment plans mitigates the impact of high lending rates, ensuring greater adaptability in managing finances, Dubai’s population growth serves as a crucial catalyst driving the demand,” they said.

Copyright © 2022 Khaleej Times. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).
Somshankar Bandyopadhyay

Source
Zawya.com

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