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Dubai’s value as a regional hub for business, finance and tourism continues to grow every year and the Dubai property market plays an integral part in sustaining this growth. Moving into the second quarter this year, here are six trends to watch for in the sector.
Sale prices and rents
This year will see a realignment of prices and rents in the luxury residential market. Hyperinflation has dramatically increased the cost of living, and a market adjustment will provide stability and prove healthy for the long-term growth of the real estate sector. With 22,000 units set to enter the Dubai residential market this year according to a JLL report, and a new equilibrium of oil prices and geopolitical shifts in the region, further consolidation in sale prices and rents is expected over the next 12 months. This will undoubtedly create attractive opportunities for buyers looking to purchase luxury property in Dubai.
The right proposition
As the residential real estate market continues to stabilise and mature this year, pleasing end users will be a priority for developers. Meeting and exceeding the expectations of the end user will determine the success of developers going forward. Users are savvy and discerning. They know what they want, and developers will need to offer the right product proposition— price, payment plan, quality, finish, access to amenities and other value additions—to win business and achieve sales growth.
Developers, especially those competing in the luxury segment, will need to take a more bespoke build approach. Buyers are becoming increasingly demanding and want the flexibility to customise their homes. Developers’ teams will have to understand the needs of buyers and work on tailor-made design solutions to accommodate their individuality and personal tastes in designing homes. Such bespoke services will become more popular in the future given greater competition in the market and more demanding buyers.
The move to hospitality
With Dubai having set a target to attract 20 million visitors by 2020, the race to make it the world’s top family destination is on. A substantial increase in hotel room inventory is required — from more than 88,000 last year to 160,000 by 2020 — and the government’s support is evident in its provision of incentives for investors, particularly in the three- and four-star categories. This is why many developers are investing in building hotel apartments and rooms. This will continue this year and beyond, as developers aim to further capitalise on buyers looking to invest in the hospitality sector.
As Dubai grows and makes its presence felt in the global real estate scene, developers will be expected to deliver value for purchasers by creating and executing real estate experiences that can be benchmarked globally. Quality finishes, materials and amenities will not be enough though—a renewed focus on quality of service and best practices by all the relevant stakeholders in the industry ecosystem will be needed. Going forward, exceptional customer service and engagement will become a necessity.
Over the past 18 months, the government has played an important role in managing the Dubai property market. The increase in registration fees to 4 per cent by the Dubai Land Department and the tightening of mortgage lending by the UAE Central Bank have stabilised it.
This year, changes in consumer finance reporting with Emcredit should help prevent borrowers from becoming overleveraged and reduce the cost of borrowing. The real estate market is now well regulated by the Real Estate Regulatory Agency (Rera), which is actively providing security to buyers, developers and banks. It ensures that the market is able to withstand any price correction.
Rera will continue to play an active role this year and maintain its leadership position in terms of keeping the real estate market balanced.
Source: Imran Shaikh, Special to Property Weekly
CEO, Shaikh Holdings
Al Nisr Publishing accepts no liability for the views or opinions expressed in this column, or for the consequences of any actions taken on the basis of the information provided.