Value of Dubai real estate deals increased by 20 per cent last year to $207 billion
UAE Introduces Game-Changing Initiatives to Boost Property Market
A series of groundbreaking initiatives have recently been launched in the UAE to enhance the nation’s property sector and attract even greater investment into a market that experienced remarkable growth last year.
Earlier this month, the Dubai Land Department introduced a smart rental index featuring a classification and rating system ranging from one to five stars for residential buildings. Additionally, the UAE Central Bank issued a directive instructing banks to stop financing Dubai Land Department registration fees and real estate broker fees effective February 1.
In another key development, private property owners of all nationalities in the Sheikh Zayed Road and Al Jaddaf areas can now convert their property ownership to freehold status. This move is expected to strengthen Dubai’s position as a leading real estate investment hub.
The freehold initiative will cover 457 eligible plots, including 128 on Sheikh Zayed Road (spanning from the Trade Centre roundabout to the Dubai Canal) and 329 plots in Al Jaddaf, as confirmed by the Dubai Land Department.
“These innovative policies strike a balance between opportunity and oversight, creating an environment conducive to sustainable growth,” noted Siraj Ahmed, partner, strategy, and consulting at Cavendish Maxwell.
“The introduction of the smart rental index and freehold ownership options opens up new opportunities for both investors and developers. Meanwhile, the Central Bank’s measures ensure financial stability, minimizing risks for banks and maintaining market resilience.”
The Sheikh Zayed Road corridor is set for a significant transformation following the freehold announcement. This development will likely include new construction, redevelopment of older buildings, and upgrades to existing properties.
“This stretch of Sheikh Zayed Road features properties dating back to the 1970s to early 2000s, offering varied conditions and performance levels. The freehold status will spark a dynamic transformation, leading to new developments, redevelopments, and properties being placed on the market,” added Ahmed.
Dubai’s Real Estate Market Continues to Thrive
Dubai’s property sector is reaching unprecedented heights, setting new records in 2024. Over 2.78 million real estate procedures were completed, with transactions valued at AED 761 billion. Investments in the sector exceeded AED 526 billion, reflecting the robust growth of the UAE economy driven by diversification strategies.
Government initiatives, such as residency permits for retirees and remote workers, along with the expansion of the 10-year golden visa program, have played a pivotal role in sustaining this growth.
According to the Dubai Media Office, Dubai recorded real estate deals worth AED 761 billion in 2024, a 20% increase from 2023. The total number of transactions also rose by 36% to reach 226,000, marking a new high in the sector’s history.
In Q3 of 2024, residential property prices surged by nearly 20% year-on-year. Apartment prices saw a 19% increase, while villa prices soared by 23%, according to a CBRE report.
Increased Transparency and Investment Opportunities
The freehold initiative for Sheikh Zayed Road is expected to broaden investment options, making Dubai an even more attractive market for global investors.
“The freehold announcement could significantly enhance investment opportunities in the city, attracting a wider range of investors,” said Ray Verma, luxury broker at Eden Realty.
The smart rental index is another step toward transparency, helping tenants and landlords make informed decisions. It is also likely to encourage further investment, as it allows investors to evaluate returns more effectively across different areas.
However, the Central Bank’s directive to limit financing of Dubai Land Department and broker fees may increase upfront costs for buyers. This could pose challenges for smaller investors, who will now need additional liquid funds for a 4% DLD fee and a 2% agent fee, on top of the usual 20% to 30% down payment for property purchases.
“This change may reduce mortgage volumes temporarily as buyers reassess their financial plans. It could also impact local banks’ revenue if mortgage activity declines,” Verma explained.
Other Real Estate Developments
Abu Dhabi recently launched its first residential rental index, providing rental value benchmarks for tenants and landlords across the capital to enhance market transparency.
Adding to the infrastructure boom, Etihad Rail announced a high-speed passenger service between Abu Dhabi and Dubai. This service will reduce travel time between the two cities to just 30 minutes, further boosting real estate growth as the population expands and new projects emerge.
Recent UAE Property Market Initiatives
- Smart Rental Index: Dubai introduced a rental classification and rating system with over 60 criteria, such as location, sustainability, security, and amenities.
- Freehold Status Conversion: Property owners in Sheikh Zayed Road and Al Jaddaf areas can now convert ownership to freehold, expanding investment opportunities.
- Central Bank Directive: Banks are instructed to halt financing for DLD registration and broker fees, effective February 1.
These transformative initiatives are paving the way for a more dynamic, transparent, and investor-friendly real estate market in the UAE.
