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The Dubai Real Estate Sector in 2023: A Market Outlook

Ellington Properties Dubai

Thinking about investing in a residential property in the UAE? If so, the best time to enter the Dubai real estate market is now! Despite the last pandemic and recent global headwinds, the Dubai property market has been growing at a steady rate in the last couple of years. More encouragingly, this upward trend is expected to continue in 2023 and beyond, which means investors should not delay entering Dubai’s real estate market. Otherwise, it might be too late.

So, how much Dubai’s prime residential prices are likely to grow in 2023?

According to global real estate consulting firm Knight Frank, prices are likely to increase by 13.5% in 2023, which is quite impressive.

Let us see what are the main factors fueling this sustained market growth:

  • A Robust economy. UAE’s economy is in great shape, despite the Covid-19 pandemic. Like 2022, UAE’s economy is expected to grow strongly next year.
  • Better rental yields. Compared to other mature real estate markets, Dubai offers higher rental yields. Generally speaking, investors can expect to enjoy a gross rental yield of anywhere between 5% and 9%.
  • Property prices per square foot are still lower compared to some other major global cities. Despite the recent price surge, owning prime real estate in Dubai is cheaper than in many other global cities. So compared to home prices in another luxury residential global markets such as Monaco or London, Dubai is still relatively affordable.
  • Favorable tax conditions. The absence of stamp duties and property taxes, which are generally applicable in other international real estate markets, is another reason why Dubai continues to be a top option for real estate investors.
  • Real estate investors can gain a residence visa (subject to certain conditions).  Investors who want to invest or buy a property priced more than AED 1 million are eligible for a 3-year residency visa. Investors looking to buy a property worth more than AED 5 million are eligible for a 5-year residency visa. If you buy or invest in a property that is worth over AED 10 million, you become eligible for a 10-year residency visa. This is one of the reasons why an increasing number of high-net-worth individuals and buyers are showing strong interest in Dubai’s real estate market.
  • A wide array of residential properties. A wide range of residential properties in different residential communities, each offering unique benefits, ensures buyers will always have plenty of options to choose from.
  • Other contributing factors, such as Dubai’s safe-haven status, a wide range of luxury properties on offer, the government’s solid response to the Covid-19 Pandemic, the historical success of the Dubai Expo 2020, and the tourism boost after the pandemic.

Some other Trends to Keep in Mind

The demand for luxury villas has increased impressively in the last few years. Given this fact, it is no surprise that villa prices in Dubai have gone up significantly. Luxury villas in Palm Jumeirah, in particular, have seen a solid demand surge. If you check the latest listings, villa prices in this part of Dubai have increased a whopping 30% roughly.  Some of the main contributing factors are:

  1. Located centrally in Dubai, Palm Jumeirah is among the most desirable addresses for people looking for a villa. If you want unparalleled sea views and views of the Marina skyline and the mainland, Palm Jumeirah is the place to be.
  2. Villa residents enjoy direct and easy access to pristine beaches. In Palm Jumeriah, you are never far from the beach and will wake up each day to the azure beauty of the pristine Arabian Gulf.
  3. As a Palm Jumeirah resident, you will quickly enjoy access to excellent amenities and facilities. Cafés and restaurants sit alongside health clubs, spas, swimming pools, gyms, water sports facilities, and parks. This area is also known for its exciting and vibrant nightlife, as there are many clubs, hotels, and bars in and around it.
  • Interest Rates Will Likely Increase

According to experts, interest rates will likely increase in the UAE. Despite this, real estate analysts expect the real estate market to continue its upward trend in 2023. The growth might not be as impressive as it was in 2022 when property prices rose by record margins, but it nevertheless is likely to be substantial.


 

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