Posted by: Helena Kryukova In recent years, the real estate market in Dubai can be compared with a new car that has just stepped off the assembly line: the inspired owners of the new supercar drove to dangerous limits and one day, in 2008-2009, they almost left the race. However, today the first rampant ardor has cooled, and the movement has become more measured and controlled. Now this unhurried move forward is no longer in danger of collapse.
The fact that the "dust has settled down" and things are even better on the market than could be expected, said the results of the first quarter, for the analysis of which leading analysts had enough time. At first, timid assessments of individual agencies, and then convincing data from official reports of such recognized authorities in the real estate world as CBRE and Knight Frank, confirmed: we can speak purely symbolically of a decrease in property prices in Dubai in the first quarter. Yes, the crazy increase in the numbers on real estate price tags is a thing of the past, but at the same time it laid such a solid foundation that even taking into account the correction for a decrease in activity in general, the data when comparing annual indicators still turn out to be in favor of the current year.
What are the numbers talking about?
The CBRE report was the first to be published. According to the analysis of this international analytical company, prices in the segment of real estate purchase and sale for the first three months of 2015 in Dubai decreased by 2% compared to the same period last year. Moreover, it should be understood that this is only an average indicator, so that in some segments of the market there was no fall at all. However, of course, the inhibition of the general processes in the real estate market should have been expressed in something. First of all, a noticeable decrease in investor and consumer activity. The aggregate value of residential property sold in Dubai for the first quarter of the year, according to CBRE, was US $ 17.4 billion, which is 20% less than the same figure for the first quarter of 2014. At the same time, the total number of housing purchase and sale transactions concluded in the first quarter decreased by only 4% compared with the first quarter of 2014.
And quite a recent, and, moreover, official, report of the Dubai Land Department, as they say, put an end to this issue by publishing its data: the total amount of real estate transactions in the "City of the Future" for the first quarter really amounted to US $ 17.4 billion, here CBRE analysts were not mistaken for a dollar. But with regard to the total number of real estate transactions, according to the report of the research and development department in the field of real estate trade at the Dubai Land Department, for the first quarter in the emirate, a total of 11,603 real estate transactions were registered, of which 8,000 were in the sale and purchase segment in which the total amount of transactions amounted to US $ 6.54 billion.
The mortgage segment in the total number of sales transactions also significantly strengthened its position. More than 3,000 properties in the first quarter in Dubai were sold using credit funds, the total number of which amounted to US $ 10.08 billion.
The official data and the data of the company CBRE was confirmed by another authority from real estate market analysts, the company Jones Lang LaSalle (JLL). However, the analysts of this agency presented a traditionally more thorough report, from which it became clear which areas in the real estate market were most prone to slowdown during the first quarter of the year. Thus, specifying the CBRE figures, the JLL agency noted a 2% decrease in apartment prices in Dubai and a very slight decline in the segment of villa sales - by 1% from last year's result for the same period. And here we come to a very interesting "fork", which entered the Dubai real estate market in 2015.
Dubai is a city of contrasts
Or, at least, it has every chance of becoming one in the near future, but exclusively in the best and most beneficial sense for all market participants. We are talking about the two most striking trends of recent times that have come forward against the background of stabilization of the real estate market and its now obvious maturity for all.
On the one hand, Dubai is the world capital of luxury, and elite real estate prices here, if they slow down the pace of growth, they are definitely not going to go minus. Which, in principle, has always prompted developers to show particular interest in this segment of real estate. But against the backdrop of soaring prices, it suddenly became apparent that the construction of affordable housing could bring no less benefit, mainly due to exceptionally high demand.
Affordable housing - for Dubai, the phrase is rather unusual, given the image of progressive luxury, which has become the hallmark of the "city of the future." But realities over time have shown: "the promised land" for many, this region is able to attract much more strong middle class, high-quality specialists with an average salary than you might expect. And all these people need to live somewhere. At the same time, not all, but rather even most of them, are not able to keep up with prices at the same rate with which the rental index has been growing recently. Thus, affordable housing has become a very relevant issue for Dubai. And the developers in time realized this.
Currently, the leadership of Dubai even decided to take a number of regulatory measures to ensure the construction of the right amount of affordable housing. Now the government of the emirate recommends developers to accompany each of their projects with the construction of affordable housing, which should be 15-20% of the total project scale. Land will be allocated for this, and the procedures for issuing building permits will be simplified. So far, these measures are advisory voluntary in nature, but in the future, if necessary, these requirements may become mandatory for all developers. However, given that the material benefits of developers and the public benefit in the form of affordable housing in Dubai have every chance to coincide in the near future, it is possible that compulsory regulatory measures will not be required.
The second direction, which has most clearly manifested itself recently, is the preservation and further strengthening of the status of Dubai as one of the world’s luxury capitals. Reidin, a popular real estate portal in the UAE, has compiled another list of the most expensive real estate sold in Dubai for the first quarter of 2015. This rating, as in previous periods, is again headed by the man-made island The Palm Jumeirah: the most expensive private property was the apartment sold here in January 2015, 3aUS $ 3.51 million. Also in the "prestigious" list of the most expensive Dubai real estate in the first quarter of 2015 of the year hit the world's tallest "twisted" Cayan Tower in the Dubai Marina area, in which two expensive apartments were sold at once, as well as The Address Downtown Hotel (Lake Hotel) in the Downtown Dubai area, where three top-level deals were also registered buying and selling real estate.
According to a report by Wealth-X and Sotheby's International Realty, in the last ten years, the focus of attention of the richest people in the world, those whose fortune is estimated at more than BUS $ 30 MILLION, has switched from London, New York, Paris and the French Riviera to Singapore, Hong Kong and especially Dubai. It is in this part of the world that all the most active economic and social processes are concentrated, and it is here that the prospects for real estate investments look especially promising. According to analysts, in 2014, at least 350 transactions for very large amounts were registered in the luxury real estate segment of the Dubai real estate market, and the total value of luxury real estate transactions concluded in Dubai in 2014, amounted to at least US $ 750 million. And this trend, as expected, has every chance to continue in the future. Despite the slowdown in many processes in the Dubai real estate market, new high-profile luxury projects from leading developers in Dubai did not decrease at all. The main reasons for the "migration" of millionaires from their homes, still remain the political stability of the UAE against the general unstable political background of the region, as well as numerous tax benefits. At the same time, the fee for registering real estate in Dubai is still considered one of the lowest in the world.
Signs of maturity
Be that as it may, for the segment of affordable housing, and for the premium property market, the collective collegial conclusion of experts from real estate is fair: the Dubai real estate market has acquired all the maturity features. The type of the main buyer of real estate in the UAE is changing, the true end buyer comes to the market, and in the investment sphere there is a move away from standard speculative schemes with a quick resale of purchased housing. Investors are now more interested in long-term returns. The scale of future construction also inspires confidence in the future. For example, in the next three years, one of the industry giants Nakheel intends to invest nearly US $ 4 billion, specifically US $ 3.81 billion, in the implementation of new projects in Dubai. The territory on which the construction of new facilities is planned takes up nearly 85 thousand square meters . And his direct competitor Emaar recently made public the true size of his land fund, which will also be built up in the coming years. Emaar owns 235 million square meters of land in the emirate.
So one thing is clear: the heyday of the construction industry in Dubai, which we are witnessing now, serves only as a springboard, a launching pad for its development, the scale and pace of which will be truly grandiose.
You can obtain additional information on the acquisition and management of real estate in Dubai from IMEXReal Estate specialists by phone, in Moscow +7 495 5100008, toll-free phone in the UAE 800-IMEX (800-4639) or by sending a request by e-mail [email protected] .
