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The real estate market in the UAE: the calm before the storm

Posted by Aziz on 03.11.2019
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In the overseas property market, the United Arab Emirates often looks like a terra incognita to a newcomer, where the only world-famous landmark is the Burj Khalifa, the tallest building in the world. However, the local real estate market hides a lot of interesting things in itself, so consider its current situation. 

The UAE has for many years been a country with a very strong economy due to its large oil reserves, which allows it to maintain the level of its inhabitants at the highest level. This December, the passport of a citizen of the United Arab Emirates topped the Global Passport Power Rank 2018, that is, became the strongest in the world. Nationals of this country can travel without a preliminary registration of visas to 167 countries of the world, which is 84% ​​of all states included in the rating. Earlier, the UAE Ministry of Foreign Affairs set itself the task of making the state’s passport the strongest in the world by 2021, but reached it three years earlier.

2019: residence permit for 10 years

It is true that it is almost impossible to obtain citizenship of the Emirates due to the fact that local authorities intend to strictly limit the number of residents who can enjoy the benefits provided by the state for their citizens. But to get a residence permit is quite realistic: for this, starting in 2019, it is enough to buy real estate in the country in the amount of 1 million dirhams. After that, it is possible to issue a residence permit for one such purchase is possible not only for the investor, but also for all the next of kin.

The main concentrate of real estate in the country is in the emirate of Dubai, which occupies the first place in terms of population in the UAE. An interesting fact is that only the rulers of Dubai and Abu Dhabi have the right to veto decisions on the most important issues of national importance in the country’s legislation, therefore these two emirates are peculiar states in the state.

The global crisis for the benefit of the property market in Dubai

As in many countries and cities with demanded real estate, in the UAE a few years ago the real estate market was severely overheated. However, in 2014, oil prices fell, which certainly affected the local housing market. The crisis that erupted around the world, sanctions and much more strongly affected the acquisition of Emirates square meters by foreigners. If Russians had previously made up a significant part of home buyers in the UAE as investments, acquiring it in the period “on paper”, which then allowed to resell it profitably, then today the possibilities have become more modest. However, this played into the hands of the fact that he was waiting for the decline in the value of real estate: over the past four years it has decreased by about 20%.

This was influenced not only by the general economic situation, but also by an increase in supply in the market. Projects grew like mushrooms after rain in the hope that real estate will always quickly find its buyer, but some lull has come. On average, the cost of square meters in the primary market is now $ 2,350, and in the secondary market – $ 2,050. If we consider the cost per square meter, then the most expensive housing is now in the Burj Khalifa skyscraper and on the territory of the most expensive villas – in Emirates Hills and in XXCarat on Palm Jumeirah.

It is impossible to predict the exact bottom of the housing cycle, but most real estate analysts agree that prices will stabilize before the World Expo 2020 World Expo, which is expected to bring around 25 million visitors to Dubai and provide at least a short-term stimulus to the real estate market. . 

80% of home buyers are foreigners

Today, although the topic of construction has become calmer compared to previous years, in addition to building up already existing areas, absolutely new areas with villas or apartments with all the necessary infrastructure continue to appear. Most often they buy apartments of 50-100 sq. M. For example, for $ 130,000 in Dubai, you can buy a studio or a one-bedroom apartment in areas of the economy class. In the coastal area of ​​Ras Al Khaimah, you can buy a studio or apartment with 1 bedroom in a residential complex with a private beach. A good one bedroom apartment in the now popular Marina area of ​​Dubai will cost from 300,000 dollars.

The number of foreign buyers continues to be a significant amount: 80% of them are foreign buyers, mainly from India, Pakistan, and China. But there were quite a few buyers from Russia – no more than 2%. Both local developers and the Dubai government are making a lot of efforts to make property more attractive to foreign investors. In the outgoing year, the legislators of the United Arab Emirates launched a series of political reforms aimed at encouraging foreign residents to buy houses and open businesses.

UAE – a reliable country for investment

Some developers have reduced payment plan requirements to make home ownership more realistic for middle-income residents. Even Emaar, the largest developer responsible for some of the most luxurious and iconic buildings in the city, including Burj Khalifa, offers installment payment plans. This is also the reason why it is better for buyers to choose leading developers who are sufficiently funded and tend to produce a higher quality product.

Based on the prerequisites, the Dubai property market will continue to grow, especially since the country recently announced a record federal budget for the next three years – as an incentive for the economy. You can also trace the recent statistics published by the local Land Department, which describes in detail the number of new investors in the real estate market in Dubai. The figures of the land department show that over the past eight months, 9,500 new investors have emerged, thanks to which an infusion of $ 5 billion into the economy has appeared. A successful state economy, summer all year round, an offshore zone and the almost complete absence of real estate taxes cannot but attract investors today.

Source: https://www.homesoverseas.ru/articles/8906

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