Dubai's future: A visionary growth toward 2040

Dubai's ambitious plans

The government's ambitious plans for 2033 and 2040 outline a vision to more than double the city's population to 7.8 million by 2040, compared to the current 3.6 million residents. To accommodate this growth, we estimate that the city will need an additional 70,000 housing units annually between now and 2040. However, projections show that only 22,000 housing units will be completed annually over the next five years. This highlights not only the magnitude of the opportunity, but also the supply-demand imbalance that will likely continue to drive rising home values.

Economic growth and real estate market

Diamondz offers a range of residential options to meet all your needs and desires. The project includes studio and presidential studios, one Meanwhile, economic growth remains robust, with sentiment in the non-oil sector rising to a five-year high earlier this year, accompanied by the highest level of job growth in eight years in February. This positivity is trickling down to the real estate market with increased demand across all sectors and a supply-demand imbalance catalyzing price increases and rent escalations. The market for luxury homes and Grade A offices is particularly strongly affected.-bedroom apartments and exclusive six-bedroom apartments with private pools. In addition, suites are available with two, three, four and six bedrooms, each with exceptional views.

UAE real estate markets: record demand and growth

Real estate markets in the UAE have experienced record demand over the past four years, with Dubai and most recently Abu Dhabi registering significant capital value growth and rent increases in virtually all real estate sectors. The UAE's long-standing policy of being an investment-friendly hub in the Middle East continues to bear fruit. Recently, Dubai was named the third best city to work in, after London and Amsterdam, while Abu Dhabi ranked fifth (Boston Consulting Group).

Investing in the UAE: an irresistible attraction

In addition, for the third consecutive year, the country has been named the world's number one nation for starting a business according to the GEM 2023/2024 Global Report. The UAE scored first globally in 12 of the 13 criteria assessed by the GEM, including entrepreneurial financing, accessible financial resources, supportive government policies, taxation and bureaucracy, government programs for entrepreneurs, entrepreneurial education in schools and after graduation, knowledge transfer and research, commercial and professional infrastructure, market dynamics and social and cultural norms.

Green investments and global appeal

In 2023, the UAE was also named the second largest recipient of foreign direct investment (FDI) in greenfield projects worldwide by UNCTAD, with a record $22.7 billion, representing a 28% increase from 2022. The country's pro-business policies contribute to its attractiveness as a real estate investment destination, in addition to soft factors such as climate, security and legal certainty. During the pandemic, these attraction factors were reinforced by the introduction of various residency visa options designed to attract and retain talent, such as the Gold Visa that offer a 10-year renewable residency permit for investments of at least AED 2 million (US$545,000) in real estate.

Global investment magnet

These drivers, combined with some of the world's most luxurious and affordable beachfront real estate, continue to strengthen the UAE's global appeal, especially for the global elite who are particularly active in Dubai's luxury residential market. Research shows that 49% of global HNWIs (High-Net-Worth Individuals) with personal wealth of more than $20 million want to invest in UAE real estate this year, and another 30% in the next 2-5 years. For those with assets of $5-20 million, 54% want to purchase real estate in the UAE this year.

Real estate market growth and profitability

Residential markets in the UAE have experienced strong growth over the past four years. In Abu Dhabi, average prices have increased 37% since Q1 2020, while in Dubai, residential values increased 9% in the 12 months to the end of Q1 2024 and 39% since Q1 2020. Homes in Dubai are on average 16% more expensive than during the last market peak in 2014. In the capital Abu Dhabi, residential prices are now only 1.3% below their 2014 peak.

Conclusion: an unprecedented opportunity market

With rents growing at almost the same rate in both cities, residential yields for just rented units averaged 6.3% for houses and 5.7% for apartments in Dubai and Abu Dhabi. On a global level, residential yields are higher than in other major global cities, contributing to the attractiveness of UAE cities as investment destinations. The perception that real estate in the Emirates is "a good investment opportunity" is the main motivation for 39% of global HNWIs considering purchasing property in the country.

With strong economic growth, attractive investment climate and an abundance of luxury real estate, the UAE remains a global investment magnet not to be missed by investors worldwide.

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(Source: Knight Frank, REIDIN)