Question: I’m thinking of buying a property in Dubai. But a friend is telling me not to as he thinks the market is about to crash. I’m not very well-informed about it. Is it a bad time to buy now? MC, Dubai
Answer: The topic of whether it is a good time to buy now or not seems to be a trending subject as many investors and end users are asking me the same question.
Firstly, it is not possible to time the market as real estate markets rise and fall over periods of time based on the simple economics of supply and demand. Of course, we will have a period of stability because no market can continue to rise year after year. That said, I will share with you my thoughts on the current state of the market and touch on what may happen in the future.
In the past, the Dubai real estate market suffered boom to bust due to instability and factors that would naturally change the course of any rising market. However, it is currently driven by major fundamentals. The government and competent authorities never hesitate to apply cooling measures if they believe the market is overheating.
Right now, the main driver for the market is population expansion, which has contributed to a sustained period of growth, especially after Covid-19. As long as this continues, we will not see any potential downturn until 2026 or 2027 at the very earliest. This prediction is based on the number of handovers of under-construction properties entering the market pool for this year and the years to follow.
However, if the current difficult economic conditions in other places, such as mainland Europe, the UK and possibly the US and Canada, continue, this could further increase Dubai’s current population numbers, in which case we could see the market continue its bull run for years to come.
Nobody can predict what will happen, but other people’s difficulties living abroad and their subsequent decision to move to the UAE, coupled with the Dubai government’s infrastructure improvements and other enhancements to life in general, will certainly keep the population numbers high and possibly even add to them.
Dubai is constantly evolving and looking to innovate and thereby attracts not just the world’s high-net-worth individuals, but ordinary people, too. Therefore, I advise you to grab a slice of the Dubai real estate market if you possibly can, because in the long run, you will be pleased you did.
Q: I’m a newbie making my first property purchase and feeling torn between investing in Dubai or looking at options in India. Property prices in Dubai seem high, capital appreciation rates have been low (0 per cent to 5 per cent since 2014), and I’m cautious about rising costs and my limited budget. Is real estate in Dubai still a good idea?
Based on my research, I think big developers do not always guarantee best quality, off-plan properties can appreciate well but come with risks, especially around delivery timelines and the future of areas like Dubai South remains uncertain.
I am looking for advice on the current real estate market in Dubai versus alternative options. I am also weighing the risks versus potential rewards in Dubai real estate and tips for a first-time buyer navigating this market. SJ, Dubai
A: I am not sure where you get your statistics from, but I can assure you that property prices across Dubai have increased by a considerably higher percentage than your estimation for both villas/townhouses and apartments. That said, it is important to enter any market with a degree of caution and I always advocate to do your homework and due diligence when it comes to any investments.
The reason for buying is also a critical consideration. If it is purely for investment, I would urge you to consider the comments above and, in fact, to dig deeper into factors such as the location, what is nearby, the amenities, who the developer is, build quality, the view, size and costs. However, if you are buying to live in, as long as you can afford the property and it ticks all your boxes, I would not hesitate to proceed.
The Dubai real estate market post Covid has seen some stellar returns and some may argue that it is now running out of steam and we are headed for a downturn. However, the market is now based on proper fundamentals, not speculation, so even if we do have a period of slowdown, it certainly is not a crash.
With the population continuing to grow (160,000 new residents moved to Dubai last year), we can see that the real estate market is in great shape and the supply of inventory is keeping up with demand. In some cases, supply is less than demand, when it comes to town houses and villas.
When it comes to real estate, as long as the buyer holds on to the investment long enough, you cannot go wrong. There are also great mortgage options available and it looks like interest rates may be coming down a bit, too.
However, if you are looking at alternative options like stocks, shares and gold, these are risky because world events can affect their value. Geopolitical events have made Dubai a safe haven and that is why the population continues to grow. Economic uncertainty, especially in Europe, UK and other parts of the world, is making investors or families look to Dubai as a safe place to move to, start a business or to live in a safe and cosmopolitan city.
Zero income tax, year-round sunshine, ease of doing business, golden visas and world-class health care and education centres add to this list. I would not hesitate to invest in Dubai.
The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario@novviproperties.com
