The aggregate indicators of the end of 2021 and the beginning of this year demonstrate the formation of a strong positive trend in the secondary market.
The bull market formed early enough in early 2022. It was accompanied by significant indicators on real estate transactions in January of this year. February only consolidated the trends, simultaneously breaking several historical records.
It is worth noting three key trends in the current situation:
- High competition among buyers due to the increase in the offered purchase prices. There is a kind of «bidding war», similar to what can be observed at auctions.
- Demand still revolves around the desire to purchase large-sized real estate. The needs formed at the height of COVID-19 continue to firmly shape consumer demand.
- Policy of the Central Bank of the UAE to raise and lower interest rates is tied to the movement of rates in the United States. The growth of the latter in the United States in 2022 will be reflected in the UAE this year.
Many residents of Dubai, who were previously content with renting housing, have recently been increasingly inclined to buy real estate.
This is confirmed by data from Dubai Land Department (DLD) and other sources, claiming that 82% of all loans obtained in 2021 fell on buyers who purchase real estate in the UAE for the first time. They buy primarily for their own needs — about 91% of people who have taken out a mortgage.
One of the main motivations is an unjustifiably high increase in residential real estate rental rates due to the extremely modest supply on the market. Rent is becoming a more expensive prospect than buying it.
The formed category of new buyers, however, prefers to turn not to the purchase of real estate on the primary market, due to its obvious high cost, but to the offer on the secondary.
It is in the current situation that this is most justified, since many new sellers have entered the market.
Basically, these are people who purchased real estate before the pandemic, two or three years ago, renovated and expanded the living space to meet new demand, and in the future simply held the property until the most profitable moment.
The offered product is a turnkey real estate. It is sold at a bargain price and offers popular conditions today. The competition among buyers is so high that the practice of a large deposit has become the norm in the market, because otherwise there will always be people ready to outbid the amount offered.
At the same time, an increase in «chain transactions» is recorded, when people are first forced to sell one property in order to then, with these funds, immediately buy another. Quite a dangerous practice if done without the help of an experienced broker.
Residential real estate prices in 2022
Due to the end of Expo-2020 on March 31, the market will expect a slight lull, which, however, should soon be replaced by a new influx of international buyers and investors. After all, not only the tourism sector is recovering in the emirate, but also the general business activity.
Nevertheless, experts do not expect explosive price growth in the market, but predict the stability of their movement. At the moment, the price of real estate is located at around USD 2,933 per square meter.
One of the promising sectors of the secondary market is villas, whose value should increase by 5-10% in 2022.
