What was once a desert oasis is now a luxurious city of gold, with a dynamic government and economy that attracts investors worldwide.
Dubai is unique in many ways.
Unlike most cities in the world, Dubai cares about your happiness. So much so that they even have a Minister of State for Happiness to ensure that everything the government does leads to a happier society.
Their mission is making sure that Dubai is “an environment in which people feel empowered, and providing sound infrastructure, opportunities for a good education, jobs and healthcare, and ensuring that people feel safe and secure,” says Ohood bint Khalfan Roumi, the ministry of happiness herself.
Given the local government’s dedication to social and economic development, it’s no surprise that Dubai’s real estate market has exploded over the past decade. Sales values are at an all-time high totalling 10.97 billion AED (2.9 billion USD) in transactions over the last four years making Dubai a key economic driver of the Emirate.
How did Dubai’s real estate market achieve such success today? The story is a fascinating one, and is made all the more interesting when you consider what the market has experienced over the past decade to make it a place which attracts investors and residents from around the globe.
Let’s take a look at the real estate journey of the City of Gold, Dubai to see what we mean.
Photo: Downtown Dubai
From the Arabian Desert to a Bustling City
While Dubai is a hotspot of glitz and glamour now, the city had its humble beginnings as a small fishing village surrounded by desert plains, dating back to the 1800s.
It wasn’t until 1901, when Dubai strategically turned itself into a free port, that it began attracting merchants seeking tax-free transactions and close proximity to Iran. Dubai soon became a key trade location, and new infrastructure projects were developed to support the growth of this trading centre.
Hotels and airports soon popped up, leading to the city’s master plan in 1959 and the Dubai Construction Boom in the 1960s. Blocks of houses and offices filled the area, as Dubai became the centre of a successful gold trade importing more gold than nearly anywhere else in the world.
Moreover, Dubai eventually discovered oil off its coast in 1966. This newfound revenue stream further accelerated the city’s infrastructure expansion, where the economy thrived from oil and trade.
By the 1970s, Dubai was on its way to becoming a bustling metropolis the cultural melting pot of the world’s elite. Today, Dubai holds a rich collection of innovative construction and architecture, with a luxurious real estate market that attracts buyers worldwide.
Dubai Expands its Property Laws
In May 2002, Dubai changed the course of its real estate market forever.
Prior to 2002, only citizens were allowed to own property here, but Dubai changed the laws to allow non-citizens to purchase property on freehold ownership. This led to another construction boom, where units were selling as fast as developers could build them, and both local and foreign buyers were buying up land left and right.
Here is a glimpse of the property boom that spread across the UAE from 2003 to 2007:
- * 9,354 properties completed in Emirates Living
- * 4,528 apartments sold and 2,153 more completed in the Marina
- * 829 properties sold and 1,393 more completed in the Arabian Ranches
- * 2,665 apartments completed in Jumeirah Lake Towers
From 2002 to 2008, property prices in Dubai nearly quadrupled. The boom became so big that the government had to form the RERA (Real Estate Regulatory Authority) in 2007 to establish new rules and regulations for property ownership in the city.
It was also this time that Dubai created its well-known landmark, Palm Jumeirah an archipelago of man-made islands with glamorous hotels, private residences, beach clubs, and world-famous nightclubs. There were also more mega-projects, such as Jumeirah Garden City, Dubailand, The Lagoons, and The World.
From 2008 to 2009, Dubai saw a total of 52,297 properties enter the market, including the following:
- * 1,425 properties in Dubai Silicon Oasis
- *2,409 new properties in Palm Jumeirah
- * 6,250 more apartments in Jumeirah Lake Towers
- *25,412 apartments in Discovery Gardens
Dubai’s average property sale price reached 2,197,956د.إ UAE dirham ($598,423 US dollars) for villas and townhouses and 1,375,068د.إ UAE dirham ($374,381 US dollars) for apartments in 2008, according to the Dubai Land Department (DLD).
The City of Gold made itself open to the world, quickly becoming a tourist, business, and investment destination. In fact, foreigners became the majority of Dubai’s population. From taking up 75% back in 2002, that percentage has now grown to roughly 90% today.
This former desert land is now a glittering metropolis that is home to the world’s tallest building and its biggest shopping malls, offering an unparalleled lavish lifestyle to those that can afford it.
Six-Year Growth Hindered by the Global Financial Crisis
Dubai was not spared from the financial crisis of 2008.
The cost of property dropped, and Dubai’s six-year building boom came to a halt.
However, the city has proved resilient by rising from the ashes. So much so that the government eventually introduced a Strategic Land programme at the Dubai Land Department (DLD) to moderate the release of properties according to demand.
By early 2010, Dubai’s property market began to recover. Apartment sales prices rose by 63% and villa sales prices increased by 16.6%. Developers saw the newfound market stability and released multiple projects over the next 5 years.
By 2015, the average sales prices of villas and townhouses further increased by 13.3% and apartment prices showed a growth of 37%. In fact, the total average prices of all transferred residential properties in 2015 successfully surpassed pre-crisis rates in 2008.
Prices for villas and townhouses did decrease sometime 2017 and 2018, even with a 9-month peak in between. Apartments also saw a steady drop from 2016 to 2019.
Still, Dubai’s property market is indicating quick recovery, impressive stability, and continuous growth. Home prices are poised to recover from the pandemic with a strong rebound thanks to increasing demand, rising oil prices, growing foreign interest, and improving economic conditions.
Turning Towards the Future: 2021 and Beyond
Today, Dubai remains to be a hotspot for buyers and investors worldwide. In June 2021, property sales increased by 173.5% year-on-year recording the highest monthly volume in 8 years. In the same period, Dubai’s total value of real estate transactions more than tripled to 14.79د.إ billion UAE dirham ($4 billion US dollars).
Off-plan property sales also rose by 74% in May 2021 compared to the previous year, as more and more investors choose to flip their properties and sell them while still under construction.
Even with COVID-19 that halted projects and closed borders, the world-class lifestyle destination is coming back swinging with massive growth in its real estate market, according to Arabian Business:
- * Pricing schemes and visa regulations are attracting foreign direct investment, where secondary and off-plan properties are seeing the highest amount of transactions in the last two years. It’s clear that the international high-net-worth community realised that Dubai is incredibly undervalued compared to other major cities worldwide.
- * Dubai Land Department reported 25,455 transactions worth 92د.إ billion UAE dirham ($25 billion US dollars) in early 2021 an increase of 51% in terms of volume and 72% in terms of value compared to the same period in 2020.
- * World Expo 2020 Dubai will commence in October 2021, where visitors can invest in Dubai’s projects for only $100k per property and a flexible Five-year Payment Plan. Projects such as Prime Views yield 7% on investment value and 18% on equity whopping numbers that will attract the global community looking to buy in one of the safest cities in the world.
Moreover, the following reasons will propel Dubai’s real estate market further in the upcoming years:
- * Demand for luxury homes is on the rise.
The value of transactions for luxury properties in the first quarter of 2021 grew by 25% compared to the previous year with villas on Palm Jumeirah selling fast and at the highest prices. In the second quarter, prime sales for high-end homes in Dubai catapulted by 43.8%.
- * Dubai’s population is on track to grow by 76% in the next two decades.
The city is already boosting its beach capacity by 400% and doubling its hotels and green spaces. Experts say Dubai will reach 5.8 million people by 2040, creating huge tenant pools for rental investors. - * Dubai’s economy continues to grow.
While Dubai relies heavily on the industries most affected by the pandemic (hospitality, tourist, retail, and travel), economic growth was 11% in the first quarter of 2021. Moreover, the two largest sectors wholesale and retail trade and financial services increased by 2.8% and 3.5% year-on-year, respectively.
Moreover, the real estate market will certainly benefit from the upcoming World Expo 2020 the six-month mega event that will pull in those seeking to live, work, and own businesses in Dubai without the previous requirement of a local partner.
Create the Perfect Home in Dubai
Nothing beats the glamour that Dubai offers, both in terms of lifestyle and investment potential. And Christie’s International Real Estate is in the best position to help you enter this, the most luxurious market there is.
As the property arm of the world’s most esteemed auction house, we’ve gone from a symbol of luxury in England to an international real estate brand recognised for its class and quality. Whether you’re looking to buy or sell property in Dubai, our team is fully equipped to put your needs first, prioritise your convenience, and protect your privacy.
You are just one step away from living the lavish lifestyle that you deserve.
Get in touch with a Christie’s agent in Dubai today to find out more. See why our brand has been trusted by royalty and celebrities for more than 250 years to manage their most lucrative sales and investments.
