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A Quick Analysis of the Real estate Sector’s Performance in 2022  

Continuing its monumental growth trajectory, the real estate sector in Dubai witnessed transactions crossing a milestone figure of half a trillion dirhams in 2022 – for the first time ever. According to the Government of Dubai Media Office, the real estate sector witnessed transactions worth a record AED 528 billion in 2022 which is a 76.5% increase from 2021. A total of 122,658 real estate transactions were registered in 2022 which was an increase of 44.7% from 2021. 

In December 2022 alone, over 8000 transactions took place which was a 63% increase from the previous year. Off-plan property sales witnessed an increase of 92.5% while secondary sales saw a 32.4% rise.

Growing Interest of Investors in Buying Property

High ROI and rental value, long-term visa, Expo 2020, District 2020, Masterplan 2040, FIFA World Cup in Qatar, increase in HNW Investors, and other favourable steps have made Dubai’s real estate more attractive than ever for investors. As a result, the sector witnessed 80,216 investors registering 115,183 new real estate investments valued at AED 264.15 billion in 2022. There was an annual growth of 59.5% in volume and 78.4% in value compared to 2021. The number of investors in 2022 also grew 53% compared to the previous year, according to the data released by the Government of Dubai Media Office.

Impact on the Property Prices 

The colossal rise in the demand to buy property in Dubai has significantly outpaced the supply. This has resulted in a surge in property prices as well as rents. According to the latest ‘Dubai Residential Market Snapshot for January 2023report by CBRE, during the year until December 2022, the average property prices rose by 9.5%. The prices for Villas increased by 12.8% while Apartment prices rose by 9%. As of December 2022, the average prices for apartments were AED 1,168 per square foot while average prices for villas reached AED 1,385 per square foot. 

Substantial Increase in Rents and Rental Growth

According to the CBRE report, in the year to December 2022, average rents increased by 26.9%. Over this period, average rents for apartments and villas surged by 27.1% and 24.9% respectively. As of December 2022, average annual apartment rents stood at AED 95,168, and average villa rents stood at AED 282,150.

The CBRE report also finds out that the residential rental growth reached an all-time high with apartment and villa rents increasing by 27.1% and 24.9% respectively in 2022. Rising demand for premium properties has been the primary reason for the increase in rent. 

To learn more about the factors responsible for the rising demand for luxury properties in Dubai, read our whitepaper – ‘What’s driving the Demand for Luxury Properties in Dubai?

Key Performing Areas in 2022

In the apartment segment, the top 5 areas that registered the highest sales rate per square foot include – Jumeirah (AED 2,324) Palm Jumeirah (AED  2,171), Downtown Dubai (AED 2,170), The Old Town (AED 1,750) and Dubai Hills Estate (AED 1,722). 

The average price for an apartment in Dubai in 2022 stood at AED 1,168 per sq. ft.

In the Villa Segment, the top 5 areas that registered the highest sales rate per square foot include – Palm Jumeirah (AED 3,921) Jumeirah (AED  2,270), Emirates Hills (AED 2,268), District One (AED 2,025) and Mohammed Bin Rashid City (AED 1,733).

Outlook for 2023

The outlook of the real estate sector for 2023 looks bright and promising. The increase in global investors will attract more corporations to Dubai which will create more demand for commercial as well as residential real estate and will lead to higher property prices and rents. According to Henley & Partners report titled – ‘Millionaire Migration Trends for 2022’ the UAE was at the pinnacle in attracting the highest- net worth Investors (HNWI) in 2022. This substantial surge in the number of millionaires will increase the demand for property which will result in an increase in both the prices as well as rents. 

According to Mr. Taimur Khan, Head of Research – MENA at CBRE Dubai,  “in the year ahead, we expect that both the average rates of price and rental growth will remain positive, however, we expect the rates to moderate and in certain more nascent communities with strong supply pipelines, to decline.”

Dubai’s real estate sector will reap the benefits of Dubai Economic Agenda ‘D33’ – the ambitious project of HH Sheikh Mohammed Bin Rashid Al Maktoum which aims to double the size of Dubai’s economy by 2033 and increase private sector investments from AED 790 billion in the past decade to AED 1 trillion in the next decade. The ‘D33’ Agenda includes the launch of innovative projects that will help achieve HH Sheikh Mohammed’s vision to make Dubai the world’s best city to live and work in. The value of the total targets set by the Dubai Economic Agenda ‘D33’ is AED32 trillion by 2033. The Agenda will foster sustainable economic growth through innovative approaches.