All you need to know about Dubai’s property market in 2022
For more than 20 years, Dubai real estate has been highly sought after by foreign and domestic investors. It has its ups as well as downs, just like all investment markets. The city had some of the best returns in any real estate market worldwide at its peak. For example, luxury homes for sale in Dubai had a high return on investment (ROI).
The market is thriving again after the emirate entered the post-pandemic period. Analysts and investors believe that the third cycle of growth will be more long-lasting than the two before it. In the following article, AX Capital outlines the most important aspects of Dubai’s real estate market.
The last year saw impressive growth, which continued into 2022. Dubai’s housing market was so strong that more than 20,000 homes were sold in just three months from January to March. This was the highest volume transaction in history’s first quarter.
All types of property assets saw a wide range in demand. The sales of apartments and villas increased significantly while the number of transactions for off-plan homes rose by nearly 100%. Sales in the secondary market experienced a 75% increase.
How does this affect the prices? It is possible to make a huge profit in one year by purchasing a condo in the city. It has been proven that villa prices have increased by 20% in the past 12 months. Apartment prices have experienced strong growth with almost 10% capital gains.
Analysts expect Dubai’s market to continue growing steadily through 2024 with an average annual return of capital of 3 to 6 percent. This is despite global economic downturn. This is despite the fact that many other international realty markets could see a decline, or even a severe correction.
Notable is the recent improvements made by Dubai to simplify real estate transactions. Foreign investors, even those who have not made any deals in the United Arab Emirates and the wider Persian Gulf region have confidence in Dubai’s open and reliable system.
How to Buy Property in Dubai in 2022
A passport is all that’s required to sell or invest in real estate in the Emirate. This is a requirement for most transactions. For properties currently under construction, this process is even simpler since there are no documents or permits required by real estate developers.
A seller will sign a form A contract with a broker, agent or broker. A buyer will sign a form B contract with a broker, agent or broker. It is a good idea to speak with an attorney.
A Form F contract (MoU/the Memorandum of Understanding), and a sale agreement are also available to delineate a transaction. Similar to other global realty markets, the MoU is similar. As the buyer, you will need to deposit 10% at this stage. This is usually a security deposit, which is refunded or reduced from the purchase price in most cases.
Rent in Freehold Zones
Dubai is one of the most luxurious real estate markets worldwide. Real estate can be classified as either free-owned (freehold), or on a long-term lease. In the sense that you own the unit and the land after the transaction, freehold is very simple.
Long-term lease agreements are used to acquire rental real estate. It is the temporary reservation of land and property. These rental agreements in Dubai are generally for 99 years. Practically, this means that the difference between leasehold or freehold has little effect on the future value of the lease until it expires.
Which one is better? Off-plan units or finished property?
Investors have no clear choice. Each accommodation type has its pros and cons. Units that are not on-plan tend to be less available. This is because you can buy a home in its construction phase, meaning it doesn’t exist yet.
Each developer will have a different payment plan for off-plan real property. However, they all include regular payments throughout the construction period. After the completion of construction and commissioning of the project, they end. You can extend some payment plans for many years after the project is completed.
The advantage of a secondary market purchase is that the property is fully ready for the buyer and can be moved in immediately after signing all the necessary documents. It is also easier to get a mortgage for ready-made property than off-plan properties. A down payment of 25% is required by most lenders.
You will ultimately make the decision between an off-plan or finished house. This decision will be influenced by your timeframe, capital availability, risk tolerance, and other standard real estate factors like location and quality.
What happens after you purchase?
You will need to ensure that the transaction and ownership are properly registered with the authorities. This is usually handled by your agent or broker.
The remaining steps are to pay the mandatory fees and connect utilities. Because many properties in Dubai were purchased during construction, the connecting of utilities usually takes place at the end of the final payment. If you’re purchasing a pre-owned property, make sure that the seller has paid all outstanding utility bills. Also, request a No Objection Certificate from the developer in order to obtain a new RERA (public utility provider) contract.
What’s a “Golden Visa?”?
Dubai’s Golden Visa Program allows you to get a long-term visa that will allow you to purchase real estate in a specified amount.
The Golden Residence program offers a 10-year visa. The criteria have been simplified and updated recently. Visa holders also have additional benefits and flexibility. The minimum threshold for purchasing housing was reduced to AED 10million (USD 2.72million) from AED 2million (USD 544.5 thousand).
Investment-attractive options in Dubai?
Real estate in Dubai is dominated by high-end options. High quality homes and well-known locations are guaranteed. You may find a wide range of homes and neighbourhoods in Dubai’s micromarkets to suit every budget.
These are investment-friendly areas that can be entered easily:
Jumeirah Village Circle, (JVC);
Jumeirah Lake Towers
JVC is very popular due to its lower rents and high demand from tenants who want to live there.
Dubai Marina and Business Bay sell middle-range options.
Palm Jumeirah, with its luxury villas, and Downtown Dubai are the market leaders. These two destinations are very popular among apartment buyers.