Dubai's real estate market shows no signs of slowing down despite the challenges posed by global tensions and inflation. The market witnessed higher activity levels on a quarterly and annual basis.
Transaction volume increased by 9 percent QOQ and 44 percent year on year in Q2 2022.
Since the end of COVID restrictions, the average transactional price per square foot has been steadily increasing, and this quarter was no exception.
The average transactional price per square foot increased by 7% from quarter to quarter, the highest quarterly increase since a year, and by 22% compared to the same quarter last year, reaching 1,391 AED/sq.ft.
The mortgage transactions remained constant, despite recent interest rate hikes announced by the central bank of the UAE. Existing investors and new property purchasers rushed to secure
financing during the quarter at the present rates, with the majority preferring a fixed rate structure to prevent the future anticipated rate hikes that would be imposed to curb rising global inflation.
As a result of the Federal Reserve's plans to rapidly raise interest rates, mortgage activity is likely to be hampered in the near future. The mortgage market will inevitably be influenced by these reforms, which are implemented to combat inflation.
However, other positive factors such as foreign direct investment, a rising population, and government initiatives supporting long term growth may help mitigate the negative impact of mortgage borrowing power and the US dollar's strength compared to other major currencies.
During the quarter, there was significant growth in the number of property sales that occurred in both the primary and secondary market segments.When compared to the same quarter in 2021,
both sets of numbers have increased by a total of 50% and 40%, respectively.
The performance of the residential luxury property (AED 10 million and above) and ultra-luxury property (USD 10 million and above) segments is reflecting the increase in millionaire migration to the
city. The number of transactions above 10 AED million increased by 113 percent year over year, while the value of these transactions jumped by 141 percent. The ultra-luxury property segment grew by 28 percent annually and by 50 percent quarter over quarter.
In light of the global political and economic climate, we anticipate that Dubai will attract a greater number of UHNWIs, resulting in a robust performance of the luxury market sector through 2022 and
beyond.
The quarter's highest value of transactions took place in Downtown Dubai. It is worth noting that 69 percent of these transactions were for off-plan and resale units under construction.The current prices in the downtown area and the fact that it is rapidly approaching maturity explain the high levels of activity.
Commercial office and retail transactions are up 7% annually and down 4% quarterly. However, transaction value is up 69% annually and 13% quarterly, indicating a higher value per transaction and a consumer preference for prime property.