Dubai’s real estate sector is making a significant contribution to the emirate’s GDP growth with the figures posting a 13.6 per cent growth last year compared to 6.9 per cent in 2017 and 6.8 per cent in 2016, according to a report by Dubai Land Department (DLD).
The improvement in economic growth rates in the emirate was accompanied by an improvement in the performance of the real estate sector, stated the DLD in its ‘Annual Report: Real Estate Sector Performance 2019’.
Meanwhile the contribution from Dubai’s construction sector to the GDP reached 6.4 per cent in 2018, compared to 6.2 per cent in both 2017 and 2016, stated the report.
The value of the gross domestic product in Dubai reached Dh398 billion ($108 billion) in 2018, compared to Dh390 billion ($106 billion) in 2017, with a GDP growth rate of 1.9 per cent in 2018.
To stimulate the GDP growth, the Dubai government has launched a series of initiatives to promote the growth process and increase the economic activities in the emirate.
Reducing the cost of doing business, providing facilities to entrepreneurs, modifying the length of stay and providing long-term residence visa for up to ten years for investors and those with outstanding skills were those initiatives.
DLD’s Annual Report comprises four chapters, each covering a variety of topics, providing a comprehensive overview of the market performance in 2018.
The first chapter of the report covers the economic growth and role of the real estate sector in this growth, whereas the second chapter analyses the operational indicators of the sector.
Chapter three focuses on the performance of the real estate sector in the ease of doing business index, ownership registration, and the global real estate sector transparency index. Chapter four focuses on economic and real estate sector growth expectations for the coming year.
Commenting on the report, Director-General Sultan Butti bin Mejren said: “The report highlights DLD’s role and its keenness to strengthen its relations with all relevant parties, including developers, investors, and customers, and keep them up to date with the latest developments in the sector to establish the principle of transparency as well as help them make the right decisions based on comprehensive data.”
“Though the real estate sector reflects the development achieved by the Emirate across all fields, it does not come without its challenges. On the one hand, we have to continue this momentum, which has been achieved through promotional initiatives at the local and global levels through our exhibitions in prominent Arab and international capitals. On the other hand, we should ensure transparent communication and openness to all investors and other parties in this sector,” he stated.
The report provides a complete overview of real estate performance in 2018 through the analysis based on sectoral and macroeconomic indicators.
The report provides a reference for all real estate stakeholders through which they can transparently trace and compare the performance of the sector over the years with other cities.
According to the report, Dubai’s real estate sector progressed in global competitiveness indicators. In the ease of doing business index, the UAE delivered outstanding results by ranking 11th globally, having advanced ten ranks among 190 countries.
This result is represented by Dubai as the largest business city and a result of improvements in a number of sectors, most prominently the real estate sector. The real estate registration index, which advanced three ranks in 2019 and ranked seventh globally, contributed to this gain.
In the 2014 -2018 global transparency index, Dubai ranked 40th in 2018, compared to 49th in 2014 and 48th in 2016. The emirate’s ranking improvement was the result of a series of initiatives that have been implemented to serve the real estate sector, including the building classification survey project.
The year 2018 witnessed around 53,000 transactions worth Dh223 billion, with overall ivestments recording Dh80 billion through more than 41,000 investments by over 31,000 investors from around the world.
The real estate investment results indicate an increasing growth in the number of corporate investors compared to individual investors.
The per centage of individual investors decreased from 62.8 per cent in 2017 to 59.8 per cent in 2018, while the per centage of corporate investors increased from 37.2 per cent in 2017 to 40.2 per cent in 2018.
This increase reflects the ability of the real estate sector to provide investment options that attract corporate investors and effectively contribute in providing huge real estate investments in the real estate sector.
The Business Bay area ranked first in terms of the number of real estate transactions with over 4,000 transactions. It also maintained the first position in transaction value with over Dh11 billion.
New investors represent 66 per cent of the total number of investors in 2018 while active investors represent 34 per cent of the total number of investors. In terms of the value of the investments, new investors represent 57 per cent of the total value of the investment in 2018 while active investors represent 43 per cent of the total value of the investments.
Individual investors from the UAE ranked first in terms of the value of the real estate investments, with investments worth over Dh10 billion. Indian investors came second with investments worth over Dh8 billion in 2018.
In terms of the real estate projects activity, the number of completed projects in 2018 was 62, with buildings comprising 74 per cent, villas 15 per cent, and villa complexes 11 per cent.
The number of new projects launched in 2018 was 84, comprising 20,000 units across villas, buildings, and land plots, said the DLD in its report.
In terms of projects that are under construction, those registered with DLD in freehold areas only reached 102 projects in 2018 as per project registration date. The number of units expected to be added from these projects is 130,000, each bound by its respective expected completion date.
Analysis for the residential sector reveals that the number of completed residential units in freehold areas only and in accordance with the projects registered in DLD reached 7,469, excluding villas and villa complexes, with a total area exceeding 893,000 sqm.
As for the demand, which is expressed by both sales and rents, the report indicates that sales represented the largest per centage of real estate transactions. Sales constituted more than 63per cent of the total number of transactions in 2018, with the recorded sales reaching over Dh 74 billion in the same period.
In terms of rents, the growth of population in Dubai has been reflected in the number of leased units and the number of lease contracts in Dubai. The number of newly leased contracts reached 246,509, while renewed lease contracts reached 251,409 in 2018.
From 2013 to 2016, new lease contracts were decreasing steadily against an increase in renewed lease contracts, whereas from 2017 until 2018, the numbers of both new and renewed lease contracts increased. However, the growth rate of new lease contracts was higher than that of renewed lease contracts. This reflected the additional demand on residential and non-residential units in the sector with the price correction in rents in Dubai.
The results of real estate sector’s performance within the first five months of 2019 indicated a significant improvement in the value of real estate transactions and investments.
The value of real estate transactions in Dubai reached Dh106 billion, compared to Dh95 billion in 2018, a growth rate of 12 per cent. In light of this data, DLD represented the country in achieving seventh place globally in the real estate registration index.
In terms of real estate project growth, the first five months of 2019 witnessed the launch of 48 new real estate projects, which are expected to represent a new addition to the real estate sector. These projects were of residential apartments, villas, and villa complexes, said the report..
Upon completion, they are expected to add approximately 8,000 new residential units to the real estate sector with a total area exceeding 730,000 sqm.
Residential apartments represent the largest per centage with 7,537 new units with a total area exceeding 668,000 sq m, compared to retail stores, offices, and other commercial units, it added.