By Rizwan Sajan, Founder and Chairman, Danube Group
Investor confidence in Dubai real estate remains very strong despite volatility in other parts of the world that could increase recessionary pressure elsewhere. The growing number of new project launches in recent months reflects rising confidence in Dubai's residential market.
Record Transactions in 2022
The same confidence shows in the number of real estate and land transactions across the emirate, which are well ahead of last year. In the first nine months of 2022, 67,000 land and property sale and mortgage transactions were recorded, with a total value of Dh180 billion, up 75.43% from Dh102.6 billion in the same period last year. At this rate, 2022 will be another bumper year for Dubai's real estate sector.
The third quarter was the best-performing quarter in the history of the sector. Real estate sales reached Dh70 billion, 18% higher than the previous quarter and 64.5% higher than Q3 2021, and 22 residential projects comprising more than 5,380 units were completed during the quarter.
A Record Year for Danube
At Danube Properties, we launched 14 projects in seven and a half years up to the end of 2021. In the first 11 months of this year alone, we launched five new projects, a record for us, and the first four sold out at launch. This happened even as prices were rising, including for off-plan property, which shows once again that there are more buyers in the emirate this year than before.
Strong Economic Growth
The UAE economy grew by 3.8% last year, and the International Monetary Fund (IMF), in its latest report, said it expects 6% growth this year, making the UAE one of the fastest-growing economies in the world. The report, issued on November 21, 2022, said:
"Economic growth has been robust this year, led by a strong rebound in tourism, construction, and activity related to the Dubai World Expo, as well as higher oil production in line with the OPEC+ production agreements. Overall, GDP growth is projected to reach above 6 percent in 2022, improving from 3.8 percent in 2021."
"Inflation has risen with global trends and is expected to average just over 5 percent this year. Fiscal and external surpluses have increased further, benefiting from the higher oil prices as well as the removal of the temporary COVID-crisis related fiscal support to businesses and households as the pandemic has gradually waned. Increased global uncertainty led to larger financial inflows, contributing to rapid real estate price growth in some segments."
Looking ahead, the IMF says the outlook remains positive, supported by domestic activity: "We expect non-hydrocarbon growth to be around 4 percent in 2023 and to accelerate over the medium-term with the implementation of ongoing reforms. Inflationary pressures are projected to moderate gradually, including from the impact of tightening financial conditions. Further development of domestic capital markets, including through the issuance of local currency debt by the federal government will also support growth."
New Families Are Moving In
Other indicators help explain the market dynamics. The Knowledge and Human Development Authority (KHDA), which regulates Dubai's education sector, said school enrolment rose 4.5% to 326,001 in November, up from 302,262 in April. Nearly 24,000 students joined Dubai's 216 schools between June and November 2022, a clear sign that new families have moved to the city, and there is a direct correlation between school enrolment and property transactions.
Why People Keep Coming to Dubai
Why are more people moving to Dubai and the UAE when both the World Bank and the IMF have downgraded the global outlook, partly because of the Russia-Ukraine war? As in previous global crises, Dubai has benefited. It continues to attract well-off families thanks to its socio-economic and political stability, safety and security, global connectivity, world-class infrastructure and high quality of life.
When there is trouble elsewhere in the world, wealthy people relocate to Dubai to live, work and do business. We therefore have good reason to expect sustainable economic growth, a strong future and a peaceful life in Dubai, and in these circumstances the real estate market can only grow.
