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The population of Dubai has been steadily rising due to the influx of professionals, investors, and expatriates drawn by the city's exciting prospects. The dynamic business landscape, tax advantages, and high quality of life have made Dubai an attractive destination for people from around the globe.
However, real estate experts have noticed that the supply of residential properties in Dubai has fallen by nearly 50 percent compared to population growth in 2023. Dubai property demand outstripping supply has contributed to price hikes, particularly in villa communities, waterfront locations, and districts with limited land for further development.
According to the Dubai Statistics Center (DSC), the emirate's population surpassed 3.65 million by mid-December, marking a growth of over 100,000. At the same time, about 50,000 new residential units were delivered in Dubai during the year. The data shows that Dubai requires 50 percent more properties to be launched in Dubai in 2024 to match the recent population growth.
As a result of the demand-supply imbalance, property values are witnessing a notable uptrend, making it a perfect time for investors to capitalize on Dubai's soaring property demand. There is a clear need for large-scale commercial and residential properties to be developed year-on-year for the foreseeable future to keep up with the demands of population growth. So the critical question is, "Is it a good time to buy property in Dubai?" And the answer is, "Yes, it surely is!".
Here are the main reasons for investing this year in Dubai's lucrative real estate market.
Dubai's investor-friendly approach extends to tax benefits, with investors spared from value-added tax (VAT), annual income tax, property tax, rental revenue tax, or capital gains tax. This enables investors to build a diverse financial portfolio, providing substantial returns.
The Dubai Global Market attracts a diverse population, fostering a robust rental market. The Dubai property market witnessed a profitable return on investment (ROI). Rental prices for affordable properties have increased from 1% to 16%, while rents for high-end properties have seen a general rise of up to 13% in Q3 2023. Luxury locations boasting higher rental yields include Business Bay, Dubai Hills Estate, and Dubai Marina.
High net-worth investors in Dubai's real estate market benefit from a structured golden visa facility for residency, adding an extra layer of attraction for those seeking long-term investments.
Dubai offers unparalleled, world-class infrastructure, setting it apart. The city's infrastructure surpasses standards in other parts of the world, making it an enticing prospect for investors seeking sustainable growth.
Despite potential interest rate hikes, Dubai's property market is anticipated to remain robust in 2023. Economic growth projections and population increases contribute to this resilience, with experts predicting a continuation of solid price growth.
Dubai has witnessed a surge in demand for luxury villas, particularly in regions like Palm Jumeirah, Jumeirah Bay Island, and Emirates Hills. With limited availability, the need for luxury villas remains high, presenting new opportunities for investors.
It's important to note that while a high-demand, low-supply market can offer advantages to investors, it also comes with challenges. Potential downsides include increased competition for available properties, potential affordability issues for homebuyers, and the risk of a market fall in the long term. Investors should conduct thorough research and consider the benefits and risks before making investment decisions.
Dubai's 2040 Urban Master Plan for Sustainable Development will be pivotal in shaping the real estate market and halting Dubai's population growth from outpacing its property supply in the coming years. The anticipated increase in the population from 3.6 million to 7.8 million by 2040 shows a clear need for continuous development of large-scale commercial and residential properties.
With the launch of an array of new off-plan units in 2023 and more expected to be launched in 2024, Dubai's residential property market will be able to match the pace of population growth by 2025-2027. Explore more about the future of the Dubai real estate market.
Moreover, the development of urban centers, including Expo 2020 and Dubai Silicon Oasis, and the upgrading of areas like Deira and Bur Dubai, Downtown and Business Bay, Dubai Marina, and JBR as per the highest planning standards will further help meet the growing housing demand in the emirate.
The crux of the matter is that as Dubai continues to offer a unique blend of investor-friendly policies, tax benefits, high rental yields, and a resilient market outlook, the Dubai property market will remain a compelling choice for those seeking long-term investment opportunities. Also, with thorough research and sound investment decisions, developers will hopefully align Dubai's residential property market supply with demand.
We can safely say no. In fact, due to the secure and steady nature of Dubai's real estate market, there is a significant upsurge in demand for properties. Also, those who have seen Dubai's property market up close in recent years acknowledge its resilience against unforeseen circumstances (such as COVID-19) and ability to adjust to changing market dynamics.
The anticipated high demand is set to sustain the upward trajectory of property prices in the UAE throughout 2024. The forecast indicates a projected 5 to 7% increase in average residential prices in Dubai. Whereas, in Abu Dhabi, prices are expected to rise within the range of 3 to 5% according to Haider Tuaima, Director and Head of Real Estate Research at ValuStrat.
In January 2024, Dubai boasted a resident population of 3,051,000, indicating a growth of 1.43% compared to January 2023.
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