BackThe property market in Dubai has been moving at an incredible pace over the course of 2021 - we have witnessed record-breaking transactions across the sales and rental segments, and new records have been set for monthly transactional performance. Recent data from real estate portal PropertyFinder shows that the value of deals in the third quarter of 2021 exceeded AED 42.34 billion, making it the best Q3 performance recorded since 2009. On a company level, we have broken several records, with several members of our team already exceeding their annual targets and getting promoted to more senior roles. All in all, it has been a phenomenal year for Dubai real estate, and if you are in the market for a new home or looking to expand your investment portfolio, now is the time to do it.
The Price is Right
One of the outcomes of this uplift in activity is an increase in prices across the board. Sellers are finding themselves in a position where they can expect to transact at their asking price rather than settling for the best offer. It should be noted - this is not inflation by any means. The market has hit a period of stability and the prices that we are currently seeing are reflective of the actual property value. But why have home prices suddenly started to rise after more than a decade of being undervalued?
According to LuxuryProperty.com Sales Director Mark Castley and his analysis of the market, prices are being driven up by an influx of cash buyers. These buyers don’t need to rely on 3rd party valuations in order to proceed with a transaction. For mortgage buyers, if a property valuation comes up with a price that is below asking, they will either have to make up the difference or lose out to a buyer who has the full amount available to pay.
Guided by the Invisible Hand
“We are really in a position where there is no room for offers or a tremendous amount of negotiation in the market, “ says Mark. “Prices are driven by activity and by the supply and demand matrix, it’s as simple as that. After the first wave of the pandemic had passed, we saw a surge in demand for Dubai real estate that has not died down. This is one of the safest cities in the world, has the highest vaccination rates in the world, and has seen a steadily falling rate of infections day by day. Consequently, enquiries from foreign buyers who want to invest or to purchase a primary home in Dubai have risen, and prices are keeping pace with that demand.”
“Prices are on track to continue rising over the next 6 months, which might be viewed as inflationary by a 3rd party valuator, but will in fact be in line with the market. Mortgage buyers risk getting priced out of their requirements, which could make it tougher to get a foothold in the market going into next year.”
For sellers, Mark believes it is a tricky balancing act. “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. 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.”
Maintaining Equilibrium
After what has been a very slow and at times painful decade for the Dubai real estate market, the COVID-19 pandemic has proven to be an unexpected boost. Both buyers and sellers are in a unique position right now, but the market can only remain stable if both sides act rationally.
If you are planning to invest in Dubai real estate and are in the market to buy, this is the time to do it. Because if you don’t go for the property you want, someone else will. If you would like a more in-depth view of the market and to better understand current buying and selling conditions, please contact our Private Client Advisory team. We will be more than happy to assist with all of your requirements and to take you one step closer to finding your perfect home.