Dubai’s real estate market slumped with the untimely arrival of Covid-19. Such a sharp decline in property prices had not been observed since 2008. However, with government’s strict measures in place, Covid is well within control in the UAE. This has inspired plenty of confidence among investors to invest in real estate – resulting in the market picking up momentum again.
In this blog, we look at the important developments in Dubai’s real estate sector.
Stake Raises $4 Million in Seed Funding
Stake is one of UAE’s largest fintech and real estate investment platform. Recently, the group raised $4m with the help of angel investors and private equity firms. According to the company, the funds will be used to accelerate growth by introducing innovative products, expansion of sales team, property sourcing etc.
Based out of DIFC, Stake lets users to browse properties in Dubai from as little as 2000 AED. The platform currently hosts properties from Downtown Dubai, Dubai Marina and soon DIFC and City Walk near Burj Khalifa. Since inception, Stake has been growing with more than 4000 active users from 54 different countries.
More Supply. Less Demand
According to classic economics, when supply of something increases and demand decreases, the prices fall. This has been the trend ever since the pandemic began last year. To get a fair idea, consider this: the supply glut in Dubai is only comparable to Buenos Aires as cities to witness decline in values for high-end residential and commercial properties.
Despite foreigners turning to Dubai for luxury homes, the demand hasn’t been consistent. Hence, oversupply has driven down values by over a third since 2015. Moreover, job losses resulting in departures further compounded the problem.
Overall, the market has properties than the demand – that’s why the low prices.
The Dubai Expo Boom
Postponed last year, the Dubai Expo 2020 is predicted to have a seminal impact on Dubai’s real estate scene. With enablers such as favorable interest and mortgage rates, and a highly effective vaccination program, the real estate market is expected to witness a big jump.
Another reason for the hike in property prices is the recent amendment in visa laws. These laws are music to the ears of investors who want to establish businesses in the metropolitan city.
As a consequence of the pandemic, builders have been facing challenges arranging logistics and raw materials for construction. Having said that, the luxury property market along with the affordable segment are gaining momentum – and as different industries open up, the gap between demand and supply will eventually end.
Rent Prices Elsewhere in the UAE
For places like Sharjah and Ajman, both the supply and prices are low. Due to a large immigrant exodus, low cost apartments are readily available. For instance, a studio apartment in Al Nahda area used to rent for as high as 40k is available for as low as 14k.
Similarly, houses in Al Qadsia and Al Nasseriya are available in the region of 500-700k. Previously, these properties started above a million AED.
All in all, these are fascinating times for someone wanting to invest in real estate in Dubai and UAE. With the Dubai Expo right around the corner, investing in real estate could be an astute investment. To get all the key insights and guidance on real estate investment in Dubai, book an appointment with us here.