History of Real Estate Market in Dubai
As the UAE going to celebrate its 51st anniversary in 2022.let us take look back at the history of its successful real estate market. Dubai is one of the seven emirates of the UAE situates in the south east of the Persian gulf on the Arabian Peninsula. Among its sister emirates Dubai is the most popular and the second largest land area after Abu Dhabi.
According to UAE’s policy, Dubai hang on to equal bargaining power and veto power with Abu Dhabi, the capital of the UAE, on all matters of national importance. The real estate industry is an important pillar of the economic diversification of Unite Arab Emirates. The UAE government is focusing on increasing the economy of the country to reduce economic dependence on revenues from oil and gas. Real estate activities generate 5.5 percent of the UAE’s GDP (Gross domestic product).
Today we know all about the current achievements and current rules in the real estate sector in Dubai. But today no one knows much about the birth and history of the real estate In Dubai. But what we are going to discuss here is the history of the real estate sector in Dubai. Let us discuss it in detail here. The real estate sector that we see today has been formed through many important and revolutionary decisions and policies.
It is a fact to say that Dubai’s property market began in 2002 when HRH sheikh UAE Vice president, Prime minister and ruler in Dubai, announced freehold rights for non-residents to own property. Private investors invested heavily in Dubai’s real estate market, which sold like hot cakes, thus leading to the development of the palms, jumeirah, spring, etc. Their success thereby led to high foreign capital inflows and the development of Dubai as a major residential, commercial and tourist destination. As per the Dubai statics centre at that time, the population of Dubai was 1,010,751, of which 75% were expats or non-nationals.
The same could be said for Abu Dhabi if law no.19 of 2005 came into effect, allowing property ownership for the first time in the emirate. The northern emirates legislative framework is patchy in areas but is slowly evolving.
Since 2003, Dubai’s property supply has accelerated and expanded across the emirate, with emirates living completing 3,364 properties instead of distribution in the creek area. In 2004, 5 new projects were sold in the marina, 654 apartments, and they were catalyst for one of the most popular areas to live in, and a vibrant community with construction ending in 15 years.in 2005 Arabian ranches handed over 823 properties and 319 apartments to marina.in 2006, emirates living developed a further 5,990 properties and delivered 3,555 apartments at the marina.
Jumeirah lake towers was introduced in 2007, with 2665 apartments completed, 2153 apartments at marina and 1,393 units at Arabian ranches. In 2008 and 2009, 52,297 properties came on the market with 2,409 in the newly formed palm jumeirah. The first ‘affordable’ properties are 25,412 apartments in discovery gardens, 1,425 properties in Dubai silicon oasis and 6250 properties in Juwemera Lake towers
RERA (Real Estate Regulatory Authority) was formed in 2007 at the peak of Dubai’s property boom, which brought in various rules and regulations to streamline land or property transactions and ownership registration in Dubai
In 2008, property deals were first made available to the public, at which time property prices across Dubai averaged AEDC2, 197,956 for villas or townhouses and AED 1,375,068 for apartments. Oqood was launched after the imposition of Act 13 in 2008, which gave several responsibilities to the developer and paved the way for off-plan registrations.
After 2008, the main challenge was to restore investor confidence in the market. However, Dubai introduced some measures to prevent the market from heating up again like before 2008, and these have been successful
In 2009, there was a collapse of major banks around the world and billions of dollars in losses globally across all sectors. Unfortunately, this affected the Dubai real estate market by 2010, with an 8% drop in villa or townhouses in 1 year and a 49% drop in apartment sale prices.
Prior to 2011, the Dubai property market suffered losses and investor were not interested in doing property deals. In fourth quarter of 2011, the Dubai property market showed a remarkable recovery and regained its momentum. Property rents and selling prices have also shown significant stability. Experts have predicted that the market will hit its lowest point in the first six months of 2012. This prediction turned out to be true as the real estate market stabilized in the first quarter of 2012.
Since 2012, Dubai has led a remarkable recovery in its real estate market. This is due to the slow recovery of the market, the capital invested in real estate and the growing chines and Indian influence in the investment market are growing rapidly as investors look for investment avenues
However, leadership of Dubai has moved quickly to establish a strong legal and regulatory framework to encourage the emergence of more stable and sustainable in the second quarter of 2015, prices increased from 2010, with an average increase of 13.3% for villas or townhouse and 37% for apartments. Average prices in 2015 for all residential properties transferred surpassed pre-cash prices
In the meantime, Dubai has reformed laws related to FDI in real estate through institutional investor schemes and by announcing facilities to invest in the market. From 4th quarter of 2016 to early 2019, apartment prices experienced a steady decline. Villa or townhouses prices fell in early 2016, but saw a 9-month high until 4th quarter of 2078 eased back to the median sales price of 1,825,843 dirhams
The average selling price of an apartment in the secondary market in November 2019 was AED 166841 compared to AED 3247207 for a villa or townhouse
In matters of landlord and tenant, a rent index was introduced in 2013. The Ejari system has been developed in the last 10 year, and a standard tenancy agreement was introduced last year. While these are positive in terms of protecting tenant’s rights and security, a new tenancy law has been introduced that distinguishes between residential and commercial property leases, which will be a welcome moreover Dubai’s real estate rules
The real estate market in Dubai is witnessing a remarkable recovery as prices and demand for residential properties have recorded an upward trend. Although other factors are the play, the growth is large driven by expo 2020 Dubai, with regions close to the global fair site performing better
Today the Dubai real estate market is fully developed. Regulatory changes such as the increase in real estate registration fees and the mortgage cap rule are two key factors that have helped the market reduce volatility in price changes
Going forward, new avenues of tourism such as theme parks, infra-structure and pre- expo 2020 development will be key demand drivers for the population of the city and indirectly home ownership.
Although rental income has declined over the past couple of years, the Dubai real estate market is considered one of the most attractive ad reliable markets in the world due to its financial and political stability
According to Dubai land department (DLD), the total sales value in the first ten months of 2021 was 177.44 billion dirhams, representing an increase of over 38 percent in terms of transactions and 63 percent in value- the highest ever. Figures recorded since 2015
In the period of 2019-2020, the real estate sector had to face a major crisis due to covid 19, but the Dubai expo 2020 that came after that has helped the real estate sector to overcome all those crises and return to its previous state
The past 50 years have laid the foundation for strong growth, equipping the UAE with the resilience to navigate uncharted waters and face any surprises that may be in store
Due to economic collapse and other bad circumstances, the real estate sector in Dubai has been destroyed in many situations, lockdowns and the spread of working from home have resulted in many residents transfer to villas in search of bigger space and private outdoor areas. But the Dubai’s real estate sector has returned to its old condition to achieve great results very quickly
2022 will see several new project announcements and projects that have been put on hold before restarting. Improvements in rental rates recorded in the last six months of 2021 are expected to continue into 2022, and the villa sales market is expected to remain relatively buoyant
Recent government regulatory reforms related to business, labour market, foreign ownership and visas are expected to boost demand for residential and office asset classes
In shortly the above is a rough timeline to show how fast Dubai real estate market is recovering and stabilizing, but these figures are representative of Dubai and different regions seen different results. 2008 registrations of okhoods, off-plan registrations, and importantly, supply and demand in the emirate have influenced the figures.