Whilst macro conditions suggest a retrenchment in real estate values across much of the West, the last year has seen real estate values in the United Arab Emirates reach an all-time high.
The ‘future city’ of Dubai accounts for much of this growth in terms of volume and value, with a large proportion of real estate continuing to be sold off-plan.
My Zibel Real Estate portfolio has been a longstanding investor in Dubai real estate. Zibel is containing to make new investments in Dubai real estate, and I firmly believe that there is still a lot of real estate appreciation to come.
The highest market in twelve years
The Qatar World Cup has brought more global attention to the gleaming new cities of the Middle East and the sparkling real estate that is available and growing rapidly in value. In Dubai alone, the real estate sales market saw average real estate prices increase by 9.2% year-on-year in October, with prices for villas rising at 13% and apartments at 8.5%.
Reports suggest that this growth places the Dubai property market at its highest point in twelve years, with 71,412 real estate transactions taking place in the year to October 2022. Jumeirah remains the most expensive area for apartments, with an average price of AED2,226 per square foot. Palm Jumeirah remains the most expensive area for villas with an average price of AED3,704 per square foot.
Yields for Dubai real estate are not just keeping pace with asset prices but are outpacing them. Over the last 12 months, the cost of renting in Dubai increased by 27.3%. The average annual rent for apartments was AED91,795 and for villas AED273,740.
A playground for the wealthy
Dubai also remains a perpetual playground for the wealthy. In 2021 alone, 2,000 millionaires moved to Dubai in less than a year, despite COVID-19, in the pursuit of safety, luxury and tax benefits. The city’s population of HNWIs with liquid assets of at least $10m is up by 8.5%. Taken together, this influx brought $13bn of new private wealth into Dubai,
In 2021, a new record was set when the Casa Del Sole sold for AED302.5 million, equivalent to $82 million. The villa is located on Frond G of Palm Jumeriah, which emerges as Dubai’s “Billionaire’s Row” and is where my Zibel Real Estate owns and rents two high-end villas.
The future of real estate in Dubai
My Zibel Real Estate portfolio will continue to invest in Dubai Real Estate. As the tides of global power shift and wealth become more mobile, Dubai is emerging as one of the world’s best places to live: filled with people from different parts of the world, with future property development prospects that are vast to the point of being limitless.
As population numbers grow, local authorities are looking at ways to give them even more of what they want. The ‘Dubai 2040’ strategy was unveiled in March 2021 with a focus on improving residents' happiness and quality of life. The ‘Dubai 2024’ goal is to consolidate Dubai as a dream destination to increase immigration, tourism and business opportunities.
National parks will make up for 50% of Dubai thanks to green corridors that will contain bicycle and pedestrian lanes as well as environmentally friendly public transport. The city will also be improving transport mobility, beaches and educational and health facilities. All of this will be hugely beneficial for continuing to stimulate and support real estate demand.
For real estate investors seeking to avoid the long and cold winter that is coming to the real estate markets of the West, they could do well by investing in the sunnier climate of Dubai.
*Tej Kohli is a real estate investor focused on properties in premium micro-locations which transcend cycles and transacting as the Zibel Real Estate portfolio.