The performance of Dubai’s property market in 2021 has been nothing short of phenomenal, with transaction levels of Dh88.12 billion ($23.99bn) in the first 8 months – surpassing the entire volume of 2020’s transactions by 22.6% according to data from real estate portal Property Finder. It is an incredible rebound for a market that seemed to be in a perilous position when Covid gripped the UAE in early 2020. However, well-implemented government protocols brought the city back from the brink and resulted in a V-shaped recovery for the market, to the point that property prices saw an average increase of 4.4% by the end of August 2021. At first glance, this may seem inflationary, but property prices are in line with the market, and the market price is now the right price.
According to Mark Castley, Sales Director at boutique brokerage LuxuryProperty.com, the market has hit a period of stability in terms of pricing, bargain seekers are out of luck. “As it stands, sellers are in a position where there is no room for offers on their property or a lot of negotiation, “ says Castley. “The supply/demand matrix drives the market, and demand has reached unprecedented levels after Dubai emerged from the first wave of the pandemic. With the vaccination drive that started this year, the UAE’s status as the most vaccinated country in the world per capita and an infection rate that has plummeted over the past couple of months, there really is no safer place to live and foreign buyers are recognizing that. Consequently, overseas inquiries about investing or buying a primary home in Dubai have risen, and prices are keeping pace with that demand.”
Castley believes that cash buyers are the primary market drivers at present. They do not need to depend on 3rd part property valuations in order to go ahead with a transaction – if they are interested in a property, they are ready to pay the price advertised. Buyers who want to present offers will not be taken seriously, and mortgage buyers who get a property valuation that is below asking price will either need to make up the difference somehow or risk losing out.
It should also be noted that despite increases in price, Dubai is still one of the most affordable luxury markets in the world. Swiss investment bank UBS has compiled data on 25 key real estate markets, and Dubai is the only one that is undervalued.
However, sellers need to be rational about the situation. “They may think it wise to hold off on selling their property in anticipation of a bigger sale in the future – but the market operates on movement and demand is at an all-time high,” says Castley. “If any sellers choose to hang back, they risk creating a situation where their property is out of sync with the market and ends up being unprofitable.”
According to analysts at HSBC Holdings and Morgan Stanley, market sentiment is expected to remain on a high for the next 12 to 18 months, with Dubai seeing sustained growth over the next few years. The bottom line is that now is the time to buy and the market price is the right price. Because if you’re not willing to take the plunge, someone else will.