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JLL, Propertyfinder, Valustrat, Asteco and other leading consultancies agree that predicted property prices growth has already started.
But in order to invest we need to know for sure, what to expect. Imexre.com presents you the main top-5 trends to shape the Dubai’s real estate market in 2016.
1. The main 2016 market trend is changing in the demand ratio between renting and buying residential property, which was confirmed by the Q1 first results. Buyers’ interest in Dubai real estate has increased by 28%, while the number of registered transactions almost doubled. Good results were also recorded at the luxury real estate market. Global investors’ interest to Dubai’s luxury property sector is an important trend of 2016, experts from Chestertons MENA forecasted. Luxury properties in Dubai prime areas like Dubai Marina, JBR and Business Bay are seen as long term trophy assets and current prices are highly attractive for global investors. Furthermore, regional tensions have also attracted luxury property buyers from other parts of the Middle East. That’s why an exceptionally favorable outlook for Dubai luxury properties in 2016 is another up-to-date market trend.
2. A surge of activity in the office rental sector is another key leading trend in Dubai’s market. And here the balance between sales and lease market sectors most obviously changed in favor of the latter. This market segment is now in the focus of the most developers and tenants, recording the fastest prices growth in four years with the parallel increase of mixed-use complexes in the whole office handovers proportion. In 2016 office rents in Dubai increased by 20% according to JLL.
3. The increase of the real estate significance as the most valuable investment asset. Experts from Deloitte consultancy concluded that over the past 13 years Dubai has experienced development on a scale and to a standard like no other real estate market globally, and Knight Frank emphasized that Dubai had become a city of superlatives over the last 15 years. That is why it is time now for the emirate to reap the harvest in the field of investors demand for business accommodation and residential units on part of the new population.
4. Rental yields is another key trend that will keep attracting international investors to Dubai. According to Land Sterling, Dubai guarantees world’s highest property rental yields, while rental income here is not taxed. Up to 10.6 % of rental return is a highest rate in the world and an everyday reality in Dubai. But some real estate categories can give you even up to 20% of yields. It’s affordable housing for salaried workers and expatriates in areas such as International City, Sports City. And even more prestigious options of residential accomodation and offices in Discovery Gardens can guarantee an average of 9% of rental income, Cluttons experts say. Although, high-end luxury villas, apartments and penthouses in central locations can also bring up to 8.10% of rental income to their owners, especially with new regulations provided in the short-term lease domain.
5. Another clear market trend is a marked extension of payments periods up to 10 and even 15 years after handover for the off-plan housing, recorded lately in Dubai. Many of Dubai's banks are now willing to provide unprecedented conditions on mortgage loans for their clients. Also, a notable trend is an introduction of guarantee schemes for units under construction. Many developers even pay dividends to their buyers making contributions during construction, while all funds are gathered on the escrow accounts, making the market more transparent and safe for investors.
Overall, a joint study conducted by Reidin and Global Capital Partners predicts that Dubai property prices will return to their previous growth pace by the end of the year due to the Dubai's budget expense increase by 12%.
