The Real Estate Market in UAE

Last week, 2509 real estate transactions ofAED 10.9 billion, or USD 2.97 billion, were made in the UAE. This sum includesselling 263 land plots for a total of AED 1.46 billion. In addition, 32 tradeswere valued at 92 million dirhams, while 130 transactions totaled 328 milliondirhams. There were 23 transactions totaling AED 28 million in the Al Yufrah 2district.

Off-Plan Properties

Off-plan properties are a wonderful placeto start if you're looking for a means to invest in real estate in the UAE butneed more convincing about the market. The buyer will benefit from being ableto purchase a house without making an upfront deposit and spread out payments.Off-plan properties also have cheaper property costs, which makes them anexcellent option for investors.

Before buying an off-plan house, you shouldtalk with the developer about the payment schedule. Before you sign anycontracts, be sure you comprehend the terms of the payments and the paymentschedule. It should inform you of any conditions if you cannot pay yourinstallments on time. 

Demand for Apartments

The UAE's real estate market has beenbooming this year for various reasons. These elements include reforms,pandemics, and government actions. A consistent increase in demand isanticipated to continue in the industry. Prices are increasing as a result, andoccupancy rates are high. Notably, demand for residences is more significantthan expected.

Particularly in the Jumeirah neighborhood,apartments are in high demand. The Palm Jumeirah region saw the mostsignificant market. There was a 1/5 increase in demand for units compared tolast year. In addition, the average rent has gone up by 21.7% in the past 12months.

Supply of Office Space

Over the coming years, more office spacewill likely be available in the UAE real estate market. In places like SheikhZayed, Business Bay, and Jumeirah Lakes Towers, rental costs are growing byabout 35% per square meter in Dubai. Rental prices have also increased in theDeira and downtown areas of the UAE. Furthermore, by the first quarter of 2022,Dubai's supply of office space is anticipated to reach 107 million square feet.

Over the next five years, the UAEcommercial real estate market is anticipated to expand at a 6% CAGR. Thenon-oil sector, however, has recently been dealing with some uncertainty. Thetravel, retail, and tourism industries in the UAE were affected by the COVID-19pandemic.

Cash Management

Cash management has been a top issue forseveral banks in the area due to the slump in the UAE's real estate market. Thedownturn has reminded these institutions that they must also concentrate onoffering their core banking products to significant international companies anda variety of small and medium-sized businesses in the area. Until recently,lending to real estate was the fastest way for banks to make significantprofits.

Customers can now handle their payables andreceivables through a single interface thanks to an electronic banking serviceoffered by Emirati NBD, for instance. This platform allows users to do variousbanking transactions online and is accessible around the clock. The real estateindustry, property management, and the legal profession all benefit from a cashmanagement solution like this.

Lender Issues

Over the past few years, several factorshave combined to impair the residential real estate market in the UAE. Themarket has been severely impacted by high supply levels, worries about anoversupply, and a pandemic that has spread through the area. Fortunately, thegovernment has put in place several policies to aid in the recovery of theeconomy and housing market. In addition, non-US participants now pay more forUAE real estate due to the high US dollar. Although demand for UAE propertieshas recently increased, it is still 25–30% below its 2014 peak.

In the United Arab Emirates, funding forreal estate purchases frequently entails a mortgage or loan. They might offerthese financings bilaterally or through a syndicate.