Although already in 2021, the shift of Dubai real estate market towards an active recovery led by the growth of the premium segment became obvious, it is 2022 that can be called the beginning of a new phase of development.
First of all, it has become possible to talk in detail about a significant excess of demand and an increasingly noticeable shortage of supply, which is exactly the opposite of the situation of recent years. Sellers have become the leading force in the market, able to dictate the pricing of properties. This is especially true for luxury real estate.
Until recently, almost all objects on the market worth more than $1 million were burdensome for their owners. Expensive premium real estate was sold sluggishly, as most investors were interested in small-sized, cheap properties with a high level of ROI.
The situation was caused by two factors:
- Before and against the background of COVID-19 pandemic, the main buyers were people with middle or low incomes, the working class, looking for affordable and practical housing.
- At the same time, the «but-to-let» model dominated among investors, that is, the emphasis was on the acquisition of properties for further leasing, not resale.
With the weakening/end of the pandemic, the unstable development of the geopolitical situation, the increase in the global economic crisis, the situation has changed. For various reasons, wealthy buyers from the USA and Canada, the EU and the UK, India and China began to migrate en masse to the UAE.
They are all looking for the main thing — a «safe haven» for their savings. The best means in such cases is always real estate, and the main violin among it is played by elite objects, the strength of which lies precisely in their high cost.
With the influx of many foreign investors with millions of savings «in their pocket», it became obvious in an extremely short time that the market was not very ready for such attention. At the moment, it is known that for the period from the beginning of 2021 to the end of the first quarter of 2022, the largest developers have already sold almost all the existing housing stock.
In the fourth quarter of last year and in the first months of this year, developers have already announced several new real estate projects, but it will take several years before they hit the market.
At the same time, sellers continue to dictate terms while real estate agencies expand their client portfolio to citizens of an increasing number of different countries.