Affordable units will represent a huge chunk of off-plan developments in Dubai
The term ‘buyer’s market’ has been used in abundance in relation to the UAE and Dubai property markets throughout 2018. The softening prices, the array of choices and accessible home loan offers has made the cost of property ownership for residents more attractive versus the cost of rent.
According to the latest data by the Dubai Land Department, Dubai’s real estate sector experienced a year-on-year increase in investments in the first 9 months of the year, totaling nearly $14bn. Add to this the latest government policy decision of granting long-term visas to UAE property owners, the prospect of investing is now even more attractive, especially for those considering staying in the UAE for longer than five years.
In particular, this announcement will likely incentivise greater investment in prime communities that were previously out of reach for many UAE residents. Insights from Dubizzle Property reveal that residential properties in prime neighborhoods are now more affordable and driving greater interest among potential buyers. According to the report, the top five searched villa communities on the platform in the first three quarters of 2018 were The Villa, Arabian Ranches, The Springs, Mudon and Palm Jumeirah, which reflected a trend that softening purchase prices are encouraging residents to consider higher end communities.
As we move into 2019, we anticipate that this trend will continue, and we will see even more end users investing in the property market.
While there is increased interest in secondary property in prime areas, we will start to see the primary market begin to stabilise as the supply soaks up the demand in the lead up to the Expo 2020. Affordable units are going to make a big part of off-plan developments as opposed to high-end luxury, in keeping with the influx of end-users entering the property market. Quality will continue to be a focus for those looking to buy and there will be increased interest from international investors, particularly Chinese nationals.
The number of Chinese expats in Dubai has increased by 53 percent over the last five years, with around 230,000 Chinese nationals currently living in the emirate and around 4,000 Chinese companies present here. Following the visit of Chinese President Xi Jinping in July 2018, the ties between China and the UAE became even stronger.
The introduction of preferential policies for China by the UAE government, such as listing Chinese as the third major language in more than 100 Dubai schools, makes Dubai more attractive for Chinese nationals. Other economic factors including the current trend of the real estate and stock markets in China, the depreciation of the Chinese yuan, and the advantages of the Dubai real estate market including freehold ownership, high rental yields, affordability and tax-free investments, will also play a key role in driving Chinese investment into the UAE next year.
When looking at commercial units, the increase in supply and slowdown of demand will continue to place pressure on the sector. This trend was experienced throughout 2018 and is expected to continue into the new year.
For those considering investing in residential property, the market is poised for both end-users and investors. With the recent positive policy decisions, attractive offers in the primary and secondary real estate markets, and the long-term capital gains, we will see a further increase in investment in 2019.