- For the initial two months of 2023, demand for real estate in Dubai, the opulent commercial metropolis of the United Arab Emirates, reached a record high, according to real estate services company CBRE.
- Some residents of Dubai have experienced rent increases of more than 50%.
- “Trust me, there are those who are prepared to pay the price,”According to a survey released on Thursday by the real estate services company CBRE, demand for real estate in Dubai, the opulent commercial metropolis of the United Arab Emirates, reached an all-time high for the first two months of the year of 2023.8,515 deals were completed in February alone in Dubai’s residential market, a staggering 43.9% increase from the prior year. 17,741 home transactions were recorded in total in January and February combined.
When asked what percentage of their rent had grown year over year, a consultant based in Dubai said to CNBC, “A 60% increase.” The expert chose to move rather than pay the increased rent while residing in Dubai’s upscale financial area, the DIFC. Other DIFC residents have complained that their landlords have requested rent increases of 50% or more, and as a result, many of them have downsized or relocated to less expensive neighborhoods.
According to RERA, the Real Estate Regulatory Agency, a division of Dubai’s Land Department, tenants are not permitted to request rent increases that exceed a predetermined percentage based on the property’s current market worth. But the DIFC functions independently of RERA regulations as a separate legal body.
And landlords are discovering ways to get around RERA regulations by evicting tenants under the pretense that they are buying the property or selling it, then leasing it to a new renter for a rent that exceeds RERA guidelines. Brokers claim that although this technique is prohibited, it still occurs regularly since many renters are unaware of their rights.According to a car, between 2021 and the present, rentals in several Dubai areas have doubled. As stated by CBRE, selling prices have increased by an average of 11.5% in the year leading up to February 2023.
However, many sellers reported significantly higher returns. An expat from Dubai who asked to remain anonymous for professional reasons purchased a residential property in early 2021 for around 4 million UAE dirhams ($1.09 million), renovated and redecorated it, and then sold it within the year for twice as much.
Compared to early 2020, the environment is as different as night and day.
Prior to the coronavirus epidemic, the oversupply of the market had caused a 25% decline in Dubai’s real estate market during the previous five years.
‘Bonkers’ rental market
Landlords are aware that as more and more people move to Dubai, there will always be individuals prepared to pay their inflated rental rates, just as a lot of landlords are doing today to profit from lucrative sales.
“Let me begin by using the word nuts. According to Ricardo Scala, founder of Ricardo Scala Estates and a luxury property broker located in Dubai, the rental market right now is simply insane. “Prices have increased by twofold and tripled in the last year and a half.”
The average rent in Dubai grew by 27.7% from February 2022 to February 2023, according to CBRE’s data.
Russian buyers
By this point, it is common knowledge that a sizable share of last year’s real estate transactions were completed by Russians. It’s nearly impossible to go around the well-known Dubai Marina or Jumeirah Beach Road neighborhood without hearing Russian being spoken.
We have seen a significant increase in Russian customers as a result of the conflict between Russia and Ukraine, Acar claimed. They were the nation with the biggest volume of transactions at the end of Q3 in 2022. Owners are taking advantage of that statistic since they are aware of it once more.
German, Swiss, Italian, and British consumers have all increased significantly, according to Scala.
Dubai’s openness and apparent normalcy for the majority of the Covid-19 pandemic, as well as the UAE’s stance of being open for business to all nationalities—including those from Israel, who cannot visit numerous Muslim nations, and from Russia, which is highly sanctioned by the West—have paid off.
New citizens and businesses have also been drawn to the nation as a result of various facilitating economic and social changes that have been implemented over the past few years, such as the remote worker visa and the legalization of 100% foreign ownership of some businesses.
Dubai ‘knows exactly what it’s doing,’
Scala stated, “I believe Dubai’s government is fully aware of its actions. They have a very, very clever game plan, in my opinion. If you look about it at a very basic level, I can almost promise that everytime a dispute or issue arises somewhere in the globe, Dubai will release some sort of offer that encourages more people to visit Dubai within 14 days.
Nobody anticipates a sudden decrease in real estate values in the interim.
According to Scala, prices will temporarily stabilize and continue to rise at the same rates. “My industry colleagues and I are having a difficult time understanding how costs will decrease that much at this time, when there are only consumers paying the prices. Then he continued, “What we don’t want to happen is for them to keep rising up more and more and more.
“Dubai is becoming more costly and it will be higher in price; it’s a fact of life,” Sajwani said to CNBC in January. The demand increases and people are able to pay higher costs because there are many wealthy individuals working for huge firms, he claimed.
