Five factors fuelling growth in the Dubai property market
Dubai is an international hub for businesses and tourists and is seeing a positive growth with many new developments and government backed initiatives. According to Digital Dubai, H1 2023 showed 3.6% growth in the real estate activity, contributing 8.2% to the overall economy. In 2023 alone, there were plans for over 25 megaprojects ranging from parks, manmade islands, skyscrapers, highways, places of worship, commercial and residential development. The big question is, why is the property market in Dubai so strong?
Here are five factors fuelling growth in the Dubai property market.
1. Strong economy
According to the International Monetary Fund, the UAE economy is projected to grow by 4.5% in 2024. This growth is expected to be driven by non-oil related sectors such as manufacturing, real estate, business development, IT and tourism. The diversified economy in Dubai has attracted a steady influx of investors, creating more job opportunities in the city and overall reducing the unemployment rate, creating a stable and strong economy.
2. Government policies
The UAE government is constantly looking for new ways to boost the economy in Dubai. One of the ways this is done is the 0% tax rate on personal income to attract individuals to work in Dubai. There is also no annual property tax for residential and commercial properties in Dubai but there are additional charges when buying a property which property seekers need to be aware of. The government has also promoted various Visa Schemes including the Golden Visa that allows long term stays for foreigners to study, work and live in the UAE.
3. High net worth individuals
Dubai is experiencing a significant increase in high net worth individuals (HNWI) moving to the city. Approximately 60,000 millionaires and 20 billionaires are currently living in the city and it is projected that more HNWI will be moving to the city in 2024. These HNWI from countries like India, Egypt and Russia, who also invest in various industries in the city, often seek high-end properties and exclusive amenities which drives the development of upscale luxury projects that suits their lifestyles. The availability of such upscale places then attracts more HNWI to move to the city and the cycle goes on and on.
4. Quality of life
Dubai strives to be an advanced futuristic city with multiple plans in place to be improve residents’ quality of life. The city is a really safe place to live with high end CCTV surveillance and police presence which puts Dubai’s safety index at 83.8. The city also provides top healthcare and education systems. The Urban Master Plan 2040 announced a 20-minute city initiative where residents should be able to meet 80% of their daily needs within a 20-minute travel from home either on foot or on cycling routes. Having almost all your daily needs close by gives you more time to spend with your loved ones and it also reduces the stress of long commutes.
5. Tourism
Dubai’s property market is highly influenced by the thriving tourism sector. UAE’s Department of Tourism and Economy were proud to claim that the since the pandemic, the tourism industry in Dubai has been flourishing with a 20% rise in tourists in H1 of 2023.The UAE plans to have 40 million tourists by 2030, in line with the ‘We Are the Emirates 2031’ vision. One of the way they plan to achieve this is by hosting high profile events such as the COP28. Having 40 million tourists visiting a small city such as Dubai can be challenging and to overcome this the government, in partnership with private sectors, plan on starting more development projects to build new hotels, holiday homes, and also, greener and more sustainable attractions for tourists.
Though overtaken by Manila for the top spot in the global property market price growth in Q3, 2023, the real estate market in Dubai is expected to grow in 2024, with prices rising by an estimated 5%. Whether Dubai manages to take back the top spot in property market price growth, it all depends on the country’s economy growth and the pace of that growth in 2024.