Dubai rising population contributes to launch of new projects and units

Inayat-ur-Rahman, Business Editor

The population in Dubai officially hit the 3.55 million mark in 2022, and with more expatriates making the emirate their second home, it continues to grow at a rapid pace.

To cater to this rising population, several new residential developments by renowned developers have been launched across the emirate. These include Dubai Ritz-Carlton Residences, Mama Residences Dubai, Safa One and Safa Two Towers, Cavalli Couture, and a new $5.4 billion community by Azizi Developments, among many others.

“More projects are in the pipeline, ready to be launched. This has presented foreign investors to venture into the market and benefit from the ever-growing Dubai real estate,” according to the Zoom Property Insights.

Besides real estate development, the emirate is also witnessing infrastructure development on a larger scale to accommodate the rising population.

Speaking about the impact of the rising population on the Dubai property market, Ata Shobeiry, CEO of Zoom Property, said an upscale lifestyle, safety, security, and abundant opportunities to grow as a professional or entrepreneur are just a few of the reasons why Dubai is welcoming more and more expats every year.

“The latest visa reforms have also proven to be the cherry on the cake since they have allowed foreign investors to enjoy additional perks when buying property in Dubai. All these factors continue to positively impact the property market,” Shobeiry said.

Amidst the rising population, the Dubai property market also continues its growth. According to the Zoom Property Insights, the annual transactions, for the first time, crossed the half-a-trillion dirhams mark in the preceding year. After a whopping 76.5 per cent increase compared to 2021, the total value of transactions in 2022 reached Dhs528 billion.

With more expats willing to make Dubai their second home, the rental market has also witnessed increased traction as the demand has surged. The average rent witnessed an increase of nearly 27 per cent last year, with villas and apartments recording a growth of 27.1 per cent and 24.9 per cent, respectively.

With rising demand due to the increase in population, these figures are expected to increase further in 2023, according to the Zoom Property Insights.

“Dubai is all set to attract more investors, entrepreneurs, job-seekers, and those seeking an upscale lifestyle in 2023. This will ultimately lead to growth in various sectors, including real estate, which is already witnessing a high”, Shobeiry concluded.

Meanwhile, According to the Asteco 2022 Q4 real estate report, the UAE has demonstrated an impressive level of resilience in the aftermath of the COVID pandemic in 2022. The economic recovery, aided by higher oil prices and a revival in tourism and trade, resulted in a significant increase in inward investment, which led to record transactional figures. Advanced business reforms and government initiatives, such as the Golden Visa and efforts to transition to a digital-driven economy, are set to benefit the real estate market in 2023.

The report indicated that the UAE’s economy continues to demonstrate growth and resilience in a challenging global context and is cementing its status as a globally attractive destination for investments.

2022, which started on a high note with the successful conclusion of Expo 2020, recorded a significant number of successful and noteworthy project launches. A trend which accelerated towards the end of the year and one that is expected to continue into 2023. These launches reflect a renewed sense of optimism in the real estate market, initially buoyed by a strongly performing secondary market and further supported by a surge in off-plan transactional activity.

In addition to a general rise in demand from end-users and ‘traditional’ investors, 2022 also saw an unspecified but substantial amount of existing and new stock being converted into short-term rental homes. This could be seen as a direct consequence of the strong performance in the hospitality sector.

The Abu Dhabi residential market recorded a delivery of approximately 8,500 residential units in 2022, spread across different areas of Abu Dhabi including Al Reem Island, Al Raha Beach and Saadiyat Island. In addition, several new projects and additional phases of previously announced developments were launched in 2022, located in Yas Island, Al Jubail Island, Al Reem Island and Saadiyat Island.

While apartment rental rates were relatively stable at the end of 2022, they recorded marginal annual increases of 1% to 2% across Abu Dhabi. However, it should be noted that lower quality buildings, particularly within Abu Dhabi City, continued to be under pressure with some having to revise their rents to compete with newer stock.

Villas and townhouses continued to achieve strong levels of demand, particularly within the well-developed villa communities located on Saadiyat and Yas Islands. Average villa rental rates increased by 4% over the year with some developments recording close to double-digit growth.

Though office rental rates were relatively stable in 2022, there was an increase in demand for new space, particularly in Grade A buildings.

Apartment and villa sales prices recorded annual growth rates of 4% on average, with some developments in Saadiyat Island and Al Raha Beach for example, increasing by 8% to 10%, compared to the same period in 2021.