Becoming the world's most sustainable city - Dubai Clean Energy Strategy
The oil boom in the 1950s triggered rapid economic growth in Dubai. Towers were built, international companies came to Dubai and tourism increased steadily. But as the economy grew, so did its environmental footprint. In 2006, WWF found that theUAE was the country with the world's largest ecological footprint per capita. Dubai was the top performer among the seven emirates.Rapid growth and urbanization is a challenge in terms of sustainability. Two years later, the UAE launched the "Masdar" project, the Arabic word for "source," in partnership with WWF, marking its first effort to promote sustainability.
In 2017, the UAE launched the"UAE Energy Strategy 2050". The goal of this strategy is to increase the contribution of clean energy to total consumption from 25% to 50% by 2050, while reducing CO2 emissions from electricity generation by 70%. Furthermore, in 2015, Dubai unveiled the"Dubai Clean Energy Strategy". With this plan, Dubai aims to source 75% of its energy needs from clean energy sources by 2050, becoming the most sustainable city in the world.
Since 1960, the population has grown from 40,000 to now over 3.5 million people. Between the end of 2020 and April 2022, the population has increased by nearly 100,000 people. By the year 2040 (click here for more on the 2040 Master Plan), the population target is about 6 million. Schools in particular are also noticing a significant increase in new enrollments, which is an indication that many are moving their center of life to Dubai.
The exceptional transaction growth in the first quarter marks a new all-time high compared to previous years. According to CBRE, the total transaction volume from January to March 2022 was the highest ever in a first quarter.
The Dubai real estate market reached new record highs during 2021. After a slump at the beginning of the Covid pandemic, the market experienced a steep upswing. Dubai recorded its highest transaction value in 12 years, with property sales worth over 151 billion dirhams (i.e., approximately $41 billion). The total number of property transactions was also the highest since 2013 at 61,241, according to Property Finder, with nearly 60% of all transactions taking place in the secondary market and 40% in the off-plan market.
Dubai has definitely confirmed itself as a "safe haven" for many during the ongoing Corona pandemic. Thanks to a solid and stable government, Dubai was and still is a haven of normalcy. The government's efficient response to the pandemic, the rapid resumption of international air traffic and the Expo 2020, which was postponed by one year, increased Dubai's already existing attractiveness as an investment location and as a primary as well as secondary residence.
The doors to Expo 2020 are open and more and more investors and tourists are coming to Dubai. This dynamic can also be felt in the real estate market. The last few months leading up to Expo 2020 have already seen exceptional growth in real estate transactions in terms of volume and value.
According to Dubai Land Department figures, property sales in July and August were the highest achieved in these months in the last 12 years. The market recovery continues and sales prices in the third quarter were up almost 10% year-on-year. Residential rental prices also increased by 6.9% year-on-year in the third quarter and net yields in Dubai averaged 6.1%.
The recovery of the real estate market in Dubai mentioned in the first quarterly real estate report is confirmed and becomes concrete.
Since November 2020, property prices have risen by an average of around 2.1 percent per month. Demand remains robust and the trend towards houses and villas is continuing. This segment has also seen the strongest price growth. This is also reflected in the mortgages concluded. Mortgages for villas and houses are increasing, while those for apartments are decreasing at the same time. In addition, completed real estate properties (secondary market) continue to be preferred and, at over 62 percent, account for the majority of all real estate transactions.
After a challenging 2020, the real estate sector in Dubai got off to a positive start in the first quarter of 2021. Impressive growth in demand has been recorded and prices and transaction volumes have also increased. According to Dubai Land Department data, over 6,300 residential property transactions were registered in the first quarter, representing a total value of AED 8.9 billion. The purchase of existing properties accounted for almost 64% of all transactions. This reflects the local situation. In other words, the market has been mainly driven by the local living and working population over the past few months.
In addition, in some of the more popular residential areas, an increase in prices of between 5% and 8% was observed. This trend shows the confidence of investors in Dubai's real estate market. Over 60% of all investors entering the market in January as well as February 2021 were also new investors, according to the Dubai Land Department, further confirming the attractiveness of the local real estate market.
According to the Bayut & Dubizzle report, the area ofJumeirah Village Circleretains its position as the most sought after area for affordable apartments and villas in Dubai. Also the areaDubai Marinais attracting the interest of many buyers and investors thanks to its high-end properties and proximity to several tourist attractions. Established residential areas such as.Palm Jumeirah,Arabian Ranches,Jumeirah Lake Towers orBusiness Bayhave been able to maintain their position and continue to be sought-after areas.
In terms of demand for luxury villas, the area ofArabian Ranchesis one of the winners. There is still increasing demand for ready-to-move-in villas in the secondary market, which is one of the reasons for the popularity of Arabian Ranches and which is already reflected in rental income.
The off-plan market in Dubai remains robust. The driver here is not a massive increase in interest for properties, but a slowdown on the supply side. Many of the announced development projects are sold out or only a few units are still available, mostly not the best of course. The market here is waiting for new announcements. In particular, smaller units in the luxury sector at theEmaar Beachfrontor atDubai Marinaare sought after.
Although the figures for the first quarter are encouragingly up on last year, it is important not to lose sight of the bigger picture. After all, the current numbers are compared to a weak base in 2020.
What we are definitely seeing is that price erosion in the market has stopped. Purchase prices in the secondary market have risen and now also justify the partly high off-plan prices of the last two years.
The market development of the last months is in line with our personal experience. We have seen a pleasing increase in enquiries and a keen interest in property investment in Dubai. We are positive that this trend will continue in 2021 and may even be boosted by the Expo activities.
On March 13, 2021, the Ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum, personally announced the launch of the "Dubai 2040 Urban Master Plan". This plan shows how Dubai wants to develop over the next 20 years.
In doing so, it becomes clear that Dubai also wants to commit to sustainable urban development and thus grow into the best city in the world.
The "Dubai 2040 Urban Master Plan" is thus in line with the vision of the United Arab Emirates for the next 50 years. The focus here is strongly on promoting the quality of life.
The ambitious plan has the following main objectives:
Increase public beaches by 400%.
60% of the area in Dubai is to become nature reserves
Urban areas and infrastructure are to be constantly developed further
(By 2040, more than half of the population should have access to public transport within a radius of 800 metres).
This is expected to further boost the growth of the economic sector, create more jobs and attract greater foreign investment at the same time. These exciting plans are also expected to grow the population from the current 3.3 million to nearly six million by 2040.
The new master plan is the seventh plan developed for the Emirate of Dubai since 1960. Since 1960, the population has grown from 40,000 to an impressive 3.3 million. Dubai, an ambitious city with a clear vision and a development journey that is far from over, even after more than 60 years...