With the strong emphasis placed on real estate by the rulers of UAE, this sector has always witnessed a high rate of economic growth. With the vast number of expat professionals coming to the UAE for work and the many architectural wonders constantly being created here, real estate is a booming sector. If you're planning to invest in real estate here, here is what you may want to know:
During the first half of this year, real estate transactions in Dubai were down by 16% in terms of the total value of deals. Overall there has been a 22% decline in the total number of real estate deals in the region. The prices of real estate and rental incomes have also declined by about 5 to 10% in the past year.
There are several reasons for the decline in real estate transactions. Rising interest rates in the United States and the strong US dollar are impacting property prices and making it more expensive for overseas buyers to acquire property in the UAE. The loss of expat jobs in various sectors such as aviation, energy and finance has also contributed to the real estate downturn.
Rental prices of property in the region have also declined in the past year or so. This also has to do with the fact that supply seems to have outstripped demand in recent times. About 45,000 new homes are expected to be added to the real estate market this year with a similar expectation for the next year. Experts, therefore, say that the downturn in the market may continue for the coming year.
It is expected that the situation will improve along with the 2020 Property Expo. This will restore confidence in the real estate sector and boost overall demand, say experts. Winning the bid to host the show means that there will be about 25 million visitors to the event over a six month period. This will likely reverse the slump and spur growth.
There are other aspects that should protect property prices and renew growth: the recent Visa reforms that will permit expats to obtain long term work permits of up to ten years. People looking to stay on for longer will also mean renewed interest in the property space.
This year there are fewer developer incentives and off plan transactions have declined; however, those invested in property in the UAE can take heart from the fact that the current downturn is only when contrasted with the previous year; which was particularly good. Last year many attractive plans and incentives were being offered by developers. There were still about Dh111 billion in H1 deals in Dubai during the first half of 2018; independently good numbers.
Buying property is still an extremely attractive proposition and remains so for expats as well. It is a good investment opportunity and generates good returns in terms of rent as well. After Emiratis, it was Indians and then Saudis who made the biggest investments here. Areas such as Business Bay, Palm Jumeirah, Dubai Marina and Burj Khalifa, as well as Al Barsha South, Jebel Ali and Al Warsan continue to present great investment opportunities.
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