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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 require an additional 70,000 homes annually between now and 2040. However, projections indicate that only 22,000 homes will be completed annually over the next five years. This not only highlights the scale of the opportunity but also the supply-demand imbalance that is likely to continue driving rising property values.
Economic growth and the real estate market
Diamondz offers a range of residential options to meet all your needs and desires. The project includes studios and presidential studios, one-Meanwhile, economic growth remains robust, with non-oil sector sentiment 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 filtering through to the real estate market with increased demand across all sectors and a supply-demand imbalance catalysing price increases and rental escalations. The luxury residential and Grade A office markets are particularly strongly influenced.-bedroom apartments and exclusive six-bedroom apartments with private pool. Additionally, suites are available with two, three, four and six bedrooms, each offering exceptional views.
UAE real estate markets: record demand and growth
The UAE's real estate markets have experienced record demand over the past four years, with Dubai and more recently Abu Dhabi registering significant capital value growth and rental increases across virtually all property sectors. The UAE's longstanding policy of being an investment-friendly hub in the Middle East continues to bear fruit. Recently, Dubai was named the third-best city in the world to work in, after London and Amsterdam, while Abu Dhabi ranked fifth (Boston Consulting Group).
Investing in the UAE: an irresistible appeal
Furthermore, the country has been named the number one nation in the world for starting a business for the third consecutive year, according to the GEM 2023/2024 Global Report. The UAE ranked first globally in 12 of the 13 criteria assessed by GEM, including entrepreneurial financing, accessible financial resources, supportive government policy, taxation and bureaucracy, government programmes for entrepreneurs, entrepreneurship education at school and post-graduation level, 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 $22.7 billion, representing a 28% increase over 2022. The country's pro-business policies contribute to its attractiveness as a real estate investment destination, alongside soft factors such as climate, safety and legal certainty. During the pandemic, these pull factors were reinforced by the introduction of various residency visa options, designed to attract and retain talent, such as the Golden Visa offering a renewable 10-year residency permit for real estate investments of at least AED 2 million (US$ 545,000).
A 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, particularly among the global elite who are especially active in Dubai's luxury residential market. Research shows that 49% of global HNWIs (High-Net-Worth Individuals) with personal wealth exceeding $20 million intend to invest in UAE real estate this year, with a further 30% planning to do so within the next 2-5 years. Among those with wealth between $5-20 million, 54% intend to purchase UAE real estate this year.
Real estate market growth and profitability
The residential markets in the UAE have experienced strong growth over the past four years. In Abu Dhabi, average prices have risen by 37% since Q1 2020, while in Dubai, residential values increased by 9% in the 12 months to the end of Q1 2024 and by 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 now sit just 1.3% below their 2014 peak.
Conclusion: an unprecedented market of opportunity
With rental prices growing almost as rapidly in both cities, residential yields for single-let units average 6.3% for villas and 5.7% for apartments in Dubai and Abu Dhabi. On a global level, residential yields are higher than in other major world cities, adding to the attractiveness of UAE cities as investment destinations. The perception that Emirati real estate represents 'a good investment opportunity' is the primary motivation for 39% of global HNWIs considering purchasing property in the country.
With strong economic growth, an attractive investment climate and an abundance of luxury real estate, the UAE remains a global investment magnet that is not to be missed by investors worldwide.
(Source: Knight Frank, REIDIN)
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