Dubai’s Economic Growth Boosts Real Estate Market

Francis Alfred gives an insight into how the real estate sector has been witnessing an increase in off-plan property investments in the past year

Dubai's real estate market is booming as the city’s economy continues to grow. The Emirate has become a major hub for international business and tourism, and its real estate sector is also witnessing increased demand from both local and international investors. In 2022 the Dubai real estate market recorded over AED 140 bn properties sold by developers. Due to the government's implementation of business-friendly policies and advanced infrastructure, the UAE, particularly Dubai, has been garnering global attention for foreign investments and entrepreneurship.

The emirate, which is one of the most popular investment destinations worldwide, has seen a phenomenal flood of foreign direct investment, retaining its first rank globally for attracting FDI projects during H1 2022. It has been estimated that the UAE economy will be witnessing a non-hydrocarbon growth of 4 percent in 2023, which the International Mutual Fund reported, will grow faster than the global GDP growth rate of 1.2 percent.

Owing to the city's strategic location, the UAE is estimated to attract USD 22 billion in FDI inflows by the end of 2023. Additionally, the country’s business and visa reforms, as well as its high-end infrastructure, have positioned it as one of the major hubs for investment. The increased influx of international investors has been one of the prime sources of real estate investment, which makes up a large chunk of the nation’s FDI.

In order to increase the real estate sector’s contribution to the overall FDI, Dubai has been making efforts in enhancing the transparency of the industry through various initiatives and investor-friendly policies. Various real estate projects are being actively promoted, including those targeted at expanding Dubai's extensive property portfolio and those geared to attract investors. To enable smooth investments in the real estate sector, the emirate has also implemented suitable incentives.

The government’s efforts in bolstering the UAE economy have been a major success, owing to the ‘Operation 300 billion’ initiative, which aims at doubling the industrial sector contribution to the GDP by 2031.

There has been a tremendous increase in the region’s economy, as the real estate sector has been witnessing an increase in off-plan property investments in the past year. It has been recorded that 50 percent of property sales have been for off-plan properties, with over two-fold value of off-plan as compared to the previous year i.e. AED 84 bn of off-plan property sales in 2022.
Owing to the UAE’s successful strategy in 2020 against the pandemic, the UAE’s real estate market has witnessed a significant uptick in 2022. Effective and efficient economic policies, infrastructure building, visa reforms, and business policies have attracted numerous investors from around the world, especially in the luxury segment of the real estate market. This growth is largely due to the city's booming tourism industry, as well as its strong performance in the financial and technology sectors.

(The Author, Francis Alfred is the Managing Director of Sobha Realty)