Moody’s: 15% increase in average real estate prices in Dubai and Abu Dhabi

2023-11-21 08:00:45

Abu Dhabi – Mubasher: Real estate prices increased by about 15 percent in the Emirates of Dubai and Abu Dhabi from the second quarter of 2021 until this week, with 80,000 units currently under construction.

Julien Haddad, Vice President and Chief Analyst at Moody’s Credit Rating Agency, noted that this strong performance reflects the success of the enhanced visa program recently launched by the UAE government, and the rapid reopening of the economy after the Corona pandemic.

He said: The gross margins of real estate developers in the country increased, driven by strong demand from local and international investors, including large inflows of Russian buyers since last year.

According to a report issued by the agency, real estate market conditions in the UAE will remain healthy during the next 12 to 18 months, but demand will be slower than the past two years.

The report stated that high interest rates have a limited near-term impact on real estate developers, while they will remain positive for banks.

The report explained that although high inflation and interest rate growth may increase risks in the long term for rated and unrated real estate developers.

The report indicated that UAE banks have worked to improve their solvency and liquidity hedging since the global financial crisis in 2008, so the percentage of non-performing loans decreased from 10.5 percent to 5.1 percent since 2011.

The total real estate transactions in Dubai from the beginning of 2023 until the end of last July amounted to about 304.3 billion dirhams, resulting from 89,824 transactions, compared to 204 billion dirhams, resulting from 66,431 transactions during the same period of 2022, a growth of 49 percent and 35 percent in terms of value and number.

Real estate market sales in Dubai from the beginning of 2023 until the end of July reached about 217 billion dirhams, resulting from 72,101 deals, compared to 136 billion dirhams through 49,999 deals during the same period of 2022, a growth of 60 percent and 44 percent in terms of value and number.

According to Dubai Land Department data, 10 urban development areas in Dubai accounted for 43.5 percent of total sales, amounting to 94.3 billion dirhams.

“Palm Jumeirah” came in first place with a value exceeding 16 billion dirhams, then “Dubai Creek Harbor” came second with a value of 11.71 billion dirhams, followed by “Burj Khalifa” in third place with 11.31 billion dirhams, and “Business Bay” came in fourth place with 11.05 billion dirhams. “Dubai Marina” is in fifth place with a value of 9.59 billion dirhams.

The latest data from Zoom Property Insights predicts that real estate prices in Dubai will rise by up to 20 percent on average, and that the luxury housing sector will continue to dominate by 13.5 percent on an annual basis in 2023.

This comes amid a further increase in real estate prices and annual rents and growing interest from high-net-worth individuals and foreign investors.

Data issued by the Department of Municipalities and Transport in Abu Dhabi showed momentum in the real estate market movement in the emirate since the beginning of this year, in terms of the value and number of properties sold during that period.

The value of real estate transactions in Abu Dhabi amounted to 20.7 billion dirhams, resulting from 4,600 sales and mortgage transactions that took place during the first quarter of this year.

The sold properties accounted for 66 percent of the total trading proceeds, compared to 33 percent, the share of mortgaged properties.

Real estate sales activities increased by 200 percent in sales proceeds during the first quarter of this year, with a total value of 13.7 billion dirhams, through 2,689 transactions, compared to a value of 4.5 billion dirhams for the same period last year, as a result of 1,869 sales transactions.

The market achieved a difference of 61 percent, and more than 5.2 billion dirhams, over the largest quarterly value of real estate sales, recorded in 2022 in its last quarter, with a total of 8.5 billion dirhams, resulting from 3,000 real estate sales transactions.

The largest share of total sales in the first quarter of 2023 was concentrated in the sale of ready-made units, with a total proceeds of 7.5 billion dirhams for about 966 units sold, or 37 percent of the total units, compared to a value of 2.9 billion dirhams for 985 units in the first quarter of last year.

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20.7 billion dirhams in Abu Dhabi real estate transactions in the first quarter of 2023

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