In conversation with: CCO, Dubai Holding Real Estate, Alex Davies

Alexander Davies - CCO DHRE.jpg
Cityscape Intelligence’s Lucy Whittaker sits down with Alex Davies, CCO at Dubai Holding Real Estate to discuss the current and future trends driving the residential real estate market in Dubai.

What have been the dominant market trends in the residential real estate sector in Dubai over recent years? Has the Covid-19 pandemic affected the popularity and profitability of certain locations? 

Dubai’s efforts to contain the pandemic have been appreciated globally. The robust sanitisation drives, strict social distancing and immensely successful vaccination programs has led to the UAE now being the most vaccinated nation in the world according to global statistics. The market has performed better than even the most optimistic forecasts that we had at the start of the year. Mortgage-backed deals too are on the increase, as residents with long-term plans to be in the country are now taking that step on the property ladder.

A prevailing trend since the pandemic began last year has been the growth in demand for spacious homes with favourable financing terms, as people adopted the work-from-home/hybrid work culture. Investors and homeowners continue to show interest in villas and townhouses that give them additional space, and we are now seeing an undersupply in this sector. DHRE has seen 350 townhouses sold out at La Rosa at Villanova with handovers expected over the next couple of months.

Keeping our primary investors in mind, ‘luxury is undoubtedly the most stand-out trend in 2021. With over 42,000 million-dollar homes, Dubai is second only to London in luxury home sales. Dubai is seeing a spectacular post-COVID rebound in luxury home sales – market analysts are calling it the “Roaring Twenties.”

The first five months of the year saw 22 properties worth more than $10 million finding a buyer, the most since 2015 and up from a total of 19 last year. Madinat Jumeirah Living, our premium luxury apartments overlooking the Burj Al Arab are fully sold out, and our luxury waterfront homes also witness strong appetite with each launch.

The Covid-19 pandemic sent shockwaves through the global economy, negatively impacting the global real estate sector. As vaccination efforts progress and restrictions continue to ease in Dubai, how quickly do you expect the market to recover and what factors will influence this recovery? 

Stretching as far back as to when the pandemic was first declared in Dubai – the authorities were quick to respond and now we can see schools reopening, flights resuming, return to offices, and of course the EXPO 2020 has begun. These efforts have been commended worldwide, in fact, the United Nations Office for Disaster Risk Reduction recently ranked Dubai as the most resilient city in the world.

Despite the pandemic slowing down the global economy, Dubai's real estate sector has maintained an accelerated growth since the beginning of 2021, reinforcing the attractiveness of the sector. Moreover, as the borders reopen and movement for visitors and returning residents normalize once again, we can expect a new population joining us with new lifestyles and international investment.

A-davies-Madinat-Jumierah.jpg

What are the main drivers behind the recent increase in residential property sales in Dubai? Do you see this trend continuing in the coming years?

There is plenty to be optimistic about as Dubai sees the fruits of various government reforms, which include the remote working visa, retirement visas, Golden Visas, and 100 per cent foreign ownership of companies. People's confidence in Dubai as a safe haven to live and work has brought in a lot of positive sentiment in the real estate market. The two go hand in hand.

According to Mortgage Finder’s 2020 report, 83 percent of borrowers in the UAE stated their purpose of purchase was to live in the property, as opposed to purchasing for investment purposes - which accounted for just 16 percent. The nature of Dubai is there will always be a significant portion of the population that are renting. We can see the market continue to work towards stability and people are financially and emotionally invested in it.

Knight Frank forecasts ‘historic levels’ of supply this year, with residential units in Dubai predicted to increase by approx. 47,000 from 2020. Do you believe that the demand exists to meet this supply?

We certainly see a strong demand in the market this year. There is a lot being done to ensure that not only foreign direct investment, but also people's stay in the country continues to grow. I believe that the government's actions have bolstered investor confidence in the real estate market.

I expect demand in the property sector to continue growing throughout the year and well into 2022 as the borders reopen and the UAE government move to reveal new initiatives to boost the economy and support growth. The successful response and sell-out of our properties is testament to the popularity and the strength of Dubai Holding’s real estate offering and an insight into the fact that there is enough demand, if not more than that of the supply. It is also a strong indication of the positive sentiment towards Dubai’s real estate market with demand witnessed from both local and international buyers.

If anything, we are noticing an undersupply now in certain segments of the market; villas and townhouses across the city continue to witness healthy demand and supply is struggling to keep up.

La-rosa.jpg

How is DHRE contributing towards achieving the goals of the Dubai 2040 Urban Master Plan?

As per Dubai’s 2040 Urban Master Plan, the population is set to increase to almost 5.8 million – and with it, an increased supply of housing will be required. It focuses on enhancing people’s happiness and quality of life and reinforcing Dubai as a global destination for citizens, residents, and visitors over the next 20 years. 

Another key objective is to develop vibrant, healthy, and inclusive communities and double green and leisure areas to provide a healthy environment to residents and visitors. Our residential destinations are designed for an integrated lifestyle and include a suite of amenities from parks, green open spaces, swimming pools and kids play areas to retail and community centres.

The likelihood is, there will be a range of residential requirements - from the affordable to the luxurious - the middle-income segment of the market is likely to require the most significant supply. DHRE delivers a wide range of homes that respond to market requirements and appeals to a global customer base.

What does the next 5 years hold for Dubai’s property market?

Looking ahead, the UAE’s GDP is forecast to expand by 1.1% in 2021 and by 4.0% in 2022, according to data from Oxford Economics, while the residential real estate market in UAE is poised to grow at a CAGR of 12.36% by 2026. With a host of new reforms and a 100% foreign ownership legislation now in effect, the next five years naturally put us on a growth path.

Developers coming up with their offerings for both ready stock and off-plan units to stimulate demand with local and foreign investors, offering attractive payment options to customers with the aim of turning tenants into owner-occupiers.

DHRE’s source markets for capital are diverse – we are seeing demand from Russia, Europe as well as more locally from the GCC and UAE, who are looking to take advantage of the city’s tax-efficiency and ease of business. This supports further foreign investment in the emirate and long-term living options for residents. I don’t see the real estate market slowing down, we are witnessing its steady growth to maturity.

Photo credit: https://dubaiholding.com/en/innovation/madinat-jumeirah-living/, https://www.dp.ae/our-portfolio/homes-to-buy/84/la-rosa-2/

 

KEEP UP WITH THE REAL ESTATE INDUSTRY
Subscribe to the Cityscape Intelligence newsletter here

Hide comments
account-default-image

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish