International hot spot and star of the Middle East, Dubai is in huge demand post pandemic with its property market touching record highs. We take a look at the numbers and what’s driving the bounce-back…

Dubai property market

Dubai’s property market is booming with the hotshot of the United Arab Emirates (UAE) recording its most valuable single day for property transactions on record at the end of June. The AED 3.9billion (£890million) worth of real estate deals done on the final day of June – a month that saw the emirate record its highest monthly sales figures in the last 13 years – is representative of skyrocketing sales during the first half of 2022.

The number of property transactions in Dubai in the first five months of 2022 rose a staggering 65 per cent compared to the same period last year, namely to 34,126 from 20,713 (Dubai Land Department). Just looking at May, the number and value of real estate sales in the emirate were 52 per cent and 66 per cent higher respectively than the same month in 2021.

Off-plan (new-build) apartments in Dubai are performing especially well. Helping to drive this sector are the UAE’s updated and more flexible Golden Visa rules, combined with a raft of new developments in the emirate’s fashionable districts, including Dubai Marina, Business Bay and Downtown. At the luxury end of the market, a rising number of international high net worth individuals (HNWI), including Russians, are choosing to invest in Dubai. This is thanks to both the emirate’s investment appeal – boosted by the recent law change that allows foreigners to fully own a Dubai-based company without an Emirati shareholder – and its successful response to the coronavirus pandemic and on-going safety precautions. According to the latest Henley Global Citizens Report, approximately 4,000 millionaires are expected to move to the UAE in 2022.

Notable sales at the luxury end of the market so far this year have included an AED 82million (£18.7million) villa at the Bulgari Resort in Jumeirah Bay Islands and AED 65million (£14.8million) villa at the Dorchester Collection in Business Bay.

What does the average house cost in Dubai?

During the first half of 2022, average prices in Dubai rose at the fastest rate ever. According to Dubai property data analyst DXBInteract, by June 2022 the average price of off-plan apartments had risen 60 per cent compared to June last year, jumping to AED 1.36million (£312,500) from AED 854,000 (£196,000). The average price of resale (also called secondary market) apartments in June was AED 1.05million (£241,000), a more conservative jump of five per cent year-on-year.

It has been a different story for villas in Dubai. The average prices for resale and off-plan villas across the first six months of the year increased compared to the same period for 2021 but at a much slower rate (six per cent and 9.6 per cent respectively). And by June prices were down compared to June 2021, settling at AED 2.7million (£621,000) for resale villas and AED 1.8million (£414,000) for off-plan villas, reported the data analyst.

Developers are keeping Dubai’s off-plan pipeline hot with 20,000 apartments across 52 projects completed in the first half of 2022, a rise of 30 per cent compared to 2021. Meanwhile, a further 18,000 units (67 projects) were launched in this period.

Is it worth buying property in Dubai?

Already an established international business and tourist hub in the Middle East, Dubai is riding the wave of a successful hosting of the World Expo. The first time the prestigious global event has been held in the Middle East, Africa and South Asia (MEASA) region, it took place in the emirate between October 2021 and March 2022, having been moved from 2020 due to lockdown.

Further feel-good factor will come later in the year when the FIFA World Cup takes place in Qatar (November 21^st to December 18^th), immediately after Dubai soaks up some of the action from the Grand Prix in neighbouring emirate Abu Dhabi. The proximity of Dubai to Qatar – along with its world-class amenities and entertainment – makes it an attractive place for international football fans to base themselves and ‘discover’ the emirate. Property agents have reported an uptick in accommodation bookings during the event, notably around Dubai’s Downtown district, and local airlines are putting on extra daily flights to Doha.

Meanwhile, Dubai continues to benefit from the UAE’s economic diversification plan (UAE Vision 2021) and Industrial Strategy 2030, which includes huge investment plans in its transport and infrastructure. One example is the construction of the Etihad Rail. Well underway, this train line linking 11 cities across the UAE’s seven emirates is expected to carry more than 36 million people each year by 2030. Once running, the journey time by rail between Abu Dhabi and Dubai will be just 50 minutes, with many districts expected to benefit from connections on the line.

From a financial perspective, the prospect of rising inflation and interest rates in the USA and Western economies combined with the weakening euro against the dollar has helped make Dubai more attractive to investors in recent months. Historically, Dubai has proved resilient against these types of effects, thanks largely to its market not being mortgage driven. Add Dubai’s highly favourable taxation, which typically sees foreign residents pay minimal tax there, makes it a highly attractive place to live.

Golden age of the Golden Visa!

Part of Dubai’s surging popularity with foreigners this year can be attributed to the changes to its Golden Visa requirements, which were introduced in the UAE in April. Under the new rules, overseas buyers can now obtain renewable long-term residency (five or 10 years) in the emirate by purchasing either an off-plan or resale property (or properties) worth AED 2million (£461,000) and the purchase (or purchases) could be financed with a mortgage from a local bank. Golden Visa requirements vary depending on the type of application but they typically enable the holder and their spouse and dependents to live, work or study in Dubai.

Meanwhile, in a bid to lure young foreign professionals and boost in particular its technology sector, in March 2021 the UAE launched a one-year residency permit for remote workers, a so-called digital nomad visa. Holders can live in Dubai while working for an overseas employer without any income tax payable there.