Since the start of the year, we have been predicting that 2022 could go down in history as a record year for real estate. Certainly, the performance of the market in the first three months of the year has shown this is very likely to be the case. Already we have seen the sale of the most expensive villa in Dubai history for a staggering AED 280 million, smashing records from last year where a number of sales were above the AED 100 million mark. As a company, we have sold the most expensive Nest villa in Al Barari as well as two prime waterfront plots for in excess of AED 250 million and have some high-value sales in the pipeline that cannot be disclosed yet. Earlier this week, we took a closer look at the sales data for prime and super-prime real estate to formulate our Q1 market report, which shows a very healthy view of the market overall.
Taking a year-on-year view, we find that the number of transactions has increased by about 11.6% from the same period in 2021, while prices have increased by an astonishing 16.3%. The rise in prices is hardly surprising, as demand has been soundly outstripping supply over the past year and continues to do so. When we look at prime areas such as Emirates Hills and the Frond villas on the Palm, the shortage in inventory becomes quite evident. The most significant effect of this is the push towards apartment projects, particularly the higher profile ones that offer a resort lifestyle – they tend to offer a limited number of units, ensuring greater privacy for residents, which is always a huge plus.
Two noticeable trends seen over the past quarter are the increase in cash buyers for most communities and the increase in off-plan sales. Dubai’s off-plan market registered a total of 6,432 transactions, with the highest valued sale being recorded at almost AED 69 million. By contrast, 3,280 off-plan sales were registered in the same period of 2021 with the highest property selling at AED 43 million. Looking at the data more closely, we can see that 95 transactions registered this year at above AED 10 million, whereas less than 25 transactions broke the AED 10 million mark in Q1 2021. This is quite a significant shift, and one that is above even pre-Covid levels (the same period in 2019 saw about 4,500 transactions with just over 30 above AED 10 million). We are also seeing an increase in the number of cash buyers entering the market – in some cases, the percentage of cash vs. mortgage has flipped around completely from what it was last year. What caused this shift?
These two points are quite closely linked and there are a number of factors involved. For starters, several high-profile off-plan projects are coming to fruition, including towers in Emaar Beachfront and resort projects such as One at Palm Jumeirah and the Royal Atlantis. This is from a combination of investors who have a higher degree of confidence in a project that is almost ready, as well as prospective homeowners who are planning to shift to Dubai in a few months and would like to start their lives in a newly completed home. Many of these buyers, particularly over the last month, have been from Europe in the wake of the current conflict. These buyers are looking at attractive payment plans for new projects, which makes it easier to manage a cash transaction that can be divided up over time.
The Dubai real estate market looks incredibly strong for the remainder of 2022. As a company, we have seen digital traffic to our website increase 400% year-on-year, with a larger volume of inquiries in the prime and super-prime space. The new UAE visa announcements will only add to that as we head into the summer. We are already dealing with several clients at the C-Suite level who have been considering the idea of Dubai as a city to lay down roots and settle with their families – now that becomes easier than ever. One of the new visa reforms makes it easier for off-plan investors to get a residence visa, which makes it highly likely that the off-plan market’s performance in Q2 and Q3 will exceed the levels seen in Q1. I have said before that this will be a historic year for Dubai real estate, and the market is already well on the way to making that happen.
