Now, nevertheless, just still summer vacations were and now is already soon again Christmas. Here in Dubai, the weather and the sea are slowly becoming more pleasant. With the pleasant weather you also meet more tourists and investors.
In the last months the global economic climate has changed drastically. In light of this, Dubai remains a popular option for international investors with its business-friendly initiatives and economic stability. The Dubai real estate market achieved its strongest sales quarter in more than 10 years from July to the end of September, setting another record in the process by recording the highest sales value ever for both a villa and an apartment. The villa sold at Palm Jumeirah on Palm Ring G for over 300 million dirhams. The apartment is a penthouse in the new project Atlantis The Royal Residences, which will soon be completed on the Palm Jumeirah. Demand for luxury real estate in particular and rental prices have increased sharply. Rental prices rose by an average of 22%. This is also reflected in the gross yield figures. Gross yields for villas increased from 5.1% to 5.6% and for apartments from 6.1% to 7.1%.
Overall market sentiment remains positive, but affordability issues are emerging. Inflation and the increase in the mortgage rate, as well as a general increase in acquisition costs, is affecting the mid-market segment and increasingly pushing some investors out of the market. (Because the dirham is pegged to the dollar, the UAE Central Bank has raised its benchmark interest rate by a total of 225 basis points since March, in parallel with the U.S. Federal Reserve). For our German customers the purchase of a real estate in Dubai is additionally complicated at the moment with the bad exchange rate (Euro to Dirhams).
Due to the higher mortgage rates and a general increase in the cost of living, we suspect that demand will decrease somewhat and prices will not increase as much. Furthermore, we have to take into account that in some areas (B-locations) there was rather an oversupply and therefore higher prices could not prevail.
We are excited about the development and are now looking forward to the end of the year and the upcoming World Cup in Qatar! The World Cup will once again put Dubai in the spotlight, as many fans have booked a hotel in Dubai and will then travel to Qatar by plane. We ourselves will also be watching a match of the Swiss national team live and will be happy to report on our experiences afterwards. 😊
Your Terra Nova Real Estate Team