Is this the right time to invest in Dubai property?
It is apparently high time to invest in the Dubai property market as prices are fairly valued and more affordable than almost all of those in the top 25 major cities worldwide.
In fact, property prices in Dubai are close to undervalued among the world’s top 25 cities, excluding Chicago. According to Switzerland-based UBS’ Global Real Estate Bubble Index (GREBI), Dubai has been bracketed among fair-valued cities along with Milan, Warsaw, Madrid, Singapore and Boston. On a score of -0.5 to 0.5, Dubai got -0.40 compared to the 0.23 of Milan, 0.36 of Warsaw, 0.43 of Madrid, 0.48 of Singapore and 0.49 of Boston.
Sailesh Israni, managing director of Sun and Sand Developers, said property prices are fairly valued in Dubai and will start to move upward in the next seven to 10 months.
“In fact, if we look at the quality of life, modern infrastructure and healthcare facilities in Dubai, perhaps the emirate’s property sector is undervalued. Going ahead, prices will go upward,” he added.
“At this conjecture, there may be some distressed properties in the market, but the trend in the last one-and-a-half month is that we are seeing stability and appreciation in certain others. We can safely say that prices have bottomed out,” he said.
Israni sees the inflow of expats from other Gulf countries will increase due to their preference for Dubai in the wake of great policies adopted by the government related to Covid-19, which made the emirate safer.
Reflecting increased activity in the realty sector, the latest data by the Dubai Land Department (DLD) released on Wednesday showed that a total of 2,480 sales transactions worth Dh4.72 billion were recorded in August, with 31.5 per cent in the off-plan segment and 68.5 per cent in the secondary segment. This brings the year-to-date total to 20,614 transactions worth Dh41.65 billion.
The DLD said August did better than July this year by 2.2 per cent. August saw a rise of 16.7 per cent in the number of real estate transactions compared to August 2019, as well as a 60 per cent increase in transaction value and a 13.4 per cent rise in the number of transactions compared to the year-ago period.
Lewis Allsopp, CEO of Allsopp & Allsopp, said the Dubai property market started strong in 2020 but came to a halt during the lockdown. However, it has since hit the ground running.
“We have seen an exponential increase in buyer registration and sales transactions. In August 2020 buyer registration rose by 129 per cent compared to August 2019 and sales transactions increased by 82 per cent with overall revenue increasing by 78 per cent,” he said.
Another trend to note is the change in demand from smaller units to larger ones. Since the start of the pandemic, the ratio of sales transactions for one-bedroom units has fallen by over 10 per cent and for studios by more than 34 per cent. The ratio of transactions for three, four and five bedrooms has increased by nine per cent, 20 per cent and 15 per cent, respectively.
Globally, on a score of 0.5 to 1.5, UBS rated property prices in Vancouver, London, Tokyo, Los Angeles, Stockholm, Geneva, San Francisco, Tel Aviv, Sydney, Moscow and New York as overvalued.
The Swiss bank projects a bubble risk in Munich, Frankfurt, Toronto, Hong Kong, Paris, Amsterdam and Zurich.
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