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Lifestyle as well as homes in Dubai are just outstanding and boasts first rate living standards, simultaneously letting you experience world class lifestyle amenities.
Hence, looking at this special treatment, it is obvious that any one would question in their mind: Is Dubai residential property overpriced?
Well, in this blog we will discover this mystery by inspecting deeply through various factors and comparative analysis on property price in Dubai.
Comparative Analysis
To understand whether Dubai Properties are over priced or not, let's compare the average income, cost of living, property taxes, and property prices across these cities with other global cities like London, New York, and Singapore.
| City | Average Income (USD) | Cost of Living Index | Price Per Sq.ft (USD) | Property Taxes (%) |
|---|---|---|---|---|
| Dubai | 4,274 | Moderate | $ 363 -$680 | 0% |
| London | 7,656 | High | $ 1,321-$3,900 | 0.5% -2.5% |
| New York | 7,920 | Very High | $1,773 | 1.9% - 2.2% |
| Singapore | 5,200 | High | $1,063 - $1,800 | 0% - 20% (on gains) |
- As compare to other cities Dubai’s monthly average monthly income is lower than London, New York, while it is competitive with Singapore
- Dubai’s moderate cost of living makes the city an attractive option for expatriates as compared to London and New York
- Dubai has no property taxes, while other cities impose different rates that impact overall housing affordability
- Dubai’s price per square foot is considerably lower than the other cities making it a more affordable option
Affordability and Market Segment
The Dubai Real Estate Market provides property in different segments which can suit your budget. The city provides luxury, mid-range property types and affordable segments for investors.
Luxury Segment: - Opulence is the ultimate identity of Dubai and the city is well known for exclusive lifestyle. Buyers looking for luxury property can get it in the most popular areas like Palm Jumeirah , Downtown Dubai and Emirates Hills. Properties in these areas boast top-notch lifestyle amenities and offer you a convenient life.
| Segment | Descriptions |
|---|---|
| Luxury | Property price above AED 10 million well equipped with high end facilities and cater an affluent life. |
Mid -Range Segment :- Dubai’s areas are divided into different property segments where you can easily get the desired property you wish. If you are looking for a balance between luxury and affordability and prefer mid-range properties than Dubai Marina , Jumeirah Lakes Towers and Arabian Ranches are excellent locations with the best property types available there.
| Segment | Descriptions |
|---|---|
| Mid-Range | Property price between AED 3 million and AED 10 million provides an appealing lifestyle. |
Affordable Segment:- If you are looking for budget-friendly options then the city has many affordable housing options in Dubai South , International city, and Dubai Silicon Oasis area. Property in this area offers a quality lifestyle. Government initiatives like the affordable housing scheme aim to make homeownership more accessible for middle income families here. Government initiatives such as introducing long -term residency visas, policies for control rent increases taken to provide home buyers affordable housing.
| Segment | Descriptions |
|---|---|
| Affordable | Property price below AED 1 million for middle income families. |
Let’s compare the property affordability with other global cities in the below table
| City | Luxury Properties (USD) | Mid-Range Properties (USD) | Affordable Properties |
|---|---|---|---|
| Dubai | 2,500,000 | 1,800,000 | 350,000 |
| London | 3,000,000 | 1,500,000 | 700,000 |
| New York | 4,000,000 | 2,000,000 | 1,000,000 |
| Singapore | 2,500,000 | 1,200,000 | 600,000 |
Government initiatives in Dubai to promote affordable Housing
- Dubai Affordable Housing Scheme: - This scheme provides subsidies to low- and moderate-income families to buy or rent homes in affordable housing communities.
- Housing Development Fund: - Provides financial assistance to eligible citizens for buying or constructing their first homes and also provides loans for home renovation and maintenance.
- Mohammed Bin Rashid Housing Establishment (MBRHE) :- A Government body who takes responsibility for building affordable housing projects implementing housing policies , in collaboration with the private sector. Real Estate Regulation Authority (RERA):- RERA promotes and regulates the affordable housing market by setting standards and guidelines.
- Dubai Land Department (DLD):- DLD supports developers to build more affordable housing developments by providing them with initiatives and grant land allocation.
- Dubai Sandbox Strategy: This initiative's aim is to improve the housing market by integrating technology into affordable housing solutions.
- Dubai 2040 Urban Masterplan :- According to this plan, building affordable housing projects is the primary objective that meets diverse housing needs in the city.
- Sustainable Housing Project: - UAE government always supports and promotes developing sustainable homes and helps incorporating energy-efficient technologies so that the affordable house also can meet the modern standard.
Factors Affecting Property Prices
Supply and Demand
The Dubai property market continuously sees a balance between supply and demand and that creates a significant impact on property prices here. It has been seen that, over the past years, Dubai has seen a surge in real estate development because of non-stop demand from residents and the supply was ample. Although the property demands fluctuated during COVID-19 Pandemic, the after-math result was surprising. Expatriates aging started buying property there.
Let’s have a close at the last five-year property supplied in Dubai Property Market to meet the end-users need.
| Years | Numbers of Unit Supplied |
|---|---|
| 2019 | 14,543 |
| 2020 | 18,384 |
| 2021 | 18,233 |
| 2022 | 20,325 |
| 2023 | 18,406 |
| 2024 (till Q2) | 14,516 |
Economic Factor
The real estate sector of Dubai is another key factor that supports Dubai’s economy. Undoubtedly, Dubai is influenced by the oil industry but after the fiscal deficit in the year 2014 the oil revenue came down to 4.6%. From then on Dubai not only depends on this only sector, the real estate sector is impacted positively and gives confidence to investors to invest in the sector.
Moreover, Dubai’s diverse sectors like tourism, finance and technology also provide a strong & stable foundation to the real estate market of Dubai. Even Dubai’s government policies and rules and regulations such as long-term visas for investors and retirement visas also play a major role in maintaining market stability and attracting foreign investment.
Economic Factors of Dubai in the Last Five Years
- Per Capita GDP as of 2022 – US$46,665
- Economic Transition – Shifted from an oil – based economy to diversified sectors, oil now contributes less than 1% to GDP.
- Major Economic Sectors (2018)- Wholesale and retail trade (26%), transport and logistic (12%), banking and financial services (10%), manufacturing (9%), real estate (7%), construction (6%), tourism (5%)
- Strategic developments – Focused on strong tourism, launch of Emirates Airline, establishment of Dubai International Financial Centre (DIFC), creation of industry -specific free zones.
- Technology and Media Hub – Dubai Internet City and Dubai Media City, housing major IT and media organizations.
Population Growth: - After the introduction of Golden Visa not only experts but foreign nationals and skilled professionals and high-net worth individuals flock to Dubai. Significantly, the population increased in Dubai even after a strong pandemic in the economy of Dubai because the city successfully managed the situation by introducing such brilliant steps.
Non -Oil Economic Diversification: - Dubai’s diverse economy from different sectors like tourism, trade, logistics and financial services support economically and reduce reliance on oil revenues. Approximately 72% of Dubai's GDP is derived from non-oil activities.
Real Estate Boom: - Dubai’s real estate growth and global hotspot for high-value property sales for homes priced above $10million shows strong & stable real estate presence.
Strong GDP Growth: - Dubai’s GDP will reach AED 429 billion in 2023, growth of 3.3% from the previous year, supported by various sectors including transportation, finance, and real estate. In Q1- 2024 Dubai’s GDP Tops AED 115 billion, with its economy growing 3.2% compared to the same period in 2023.
High Purchasing Managers Index (PMI):- The PMI for Dubai has remained consistent and shows an upward trajectory of business expansion and economic momentum.
Inflation and Cost of Living: - Cost of living in Dubai is as affordable as other global cities that offers the same luxury and advanced lifestyle as well as infrastructure facilities. Further, Dubai offers affordable properties for lower and middle-income families.
Lifestyle and Amenities
The Dubai residential property market holds several USPs which boost the property value. The city is known for its luxury lifestyle, safe zone for solo travellers and women, and hub of world-class infrastructure.
The city is home to major landmarks such as Burj Khalifa , Dubai Mall , High-end amenities, luxury hotels and exclusive shopping destinations. Opulent lifestyle is what the city provides and for affluent home buyers Dubai is the most preferable choice. The city meets your every need, specifically the demands for high-end residential property in the most sought-after location in Dubai at Downtown Dubai and Dubai Marina.
Safety & Security
Safety is the primary concern of any home buyers, investors, visitors anywhere they visit. In this case, Dubai has the lowest crime rates globally because the city is supported by stringent laws and advanced law enforcement technologies. Such assurance not only enhances the quality of life but makes Dubai an attractive investment zone.
World Class Infrastructure
Dubai’s infrastructure is considered the best in the world and unbeatable. The city boasts advanced transportation systems, telecommunications and meticulously planned urban development. The robust infrastructure of the city supports a convenient lifestyle. The world class infrastructure facilities of Dubai is the primary reason that increases property desirability amidst expatriate and foreigners.
Conclusion
Although, Dubai residential property may appear over priced at first glance but as you analyze deeper into it and compare with other global cities you will get a clear picture about Dubai Property Market.
There are several factors such as supply and demand, economic conditions, lifestyle amenities and investment potential all contribute to the pricing landscape. When it comes to luxury lifestyle in an affordable price range as compared to other cities Dubai is the best option. Hence, Dubai Property price is whether overpriced or affordable it is completely dependent on different circumstances and market conditions.
