Revealed: Local expats poised to drive next property market boom in Dubai

Local expatriates are poised to take the lead in Dubai and the UAE's upcoming property market boom, fueled by rising rental costs and the growing appeal of the region's economic growth prospects and stability. According to a recent market survey and industry experts, Dubai is quickly transforming from a sought-after real estate investment destination to a preferred long-term settlement choice for families worldwide. This shift is supported by various government initiatives aimed at deregulating the economy and attracting talented expats.

In 2022, local expats accounted for 40 percent of all property purchases in Dubai, and industry experts predict that this figure will rise to 50 percent by 2025. The expectation of high returns on investments, driven by the continuous rise in Dubai's property market prices, is expected to further stimulate expat investments in the real estate market.

"The increasing cost of rent in Dubai has emerged as a significant driver for local expats to invest in property rather than continue bearing the burden of escalating rental rates," explained Abhishek Jha to Arabian Business. He added, "With a substantial 20 percent surge in average rental prices for two-bedroom apartments in 2023, many local expats perceive property ownership as a viable alternative."

Buy vs Rent debate

According to a recent consumer survey conducted by RedSeer, a leading global digital consultancy, a substantial number, specifically around two-thirds, of local expats and residents are choosing to invest in property instead of renting, primarily due to the continuous surge in rental rates.

The survey conducted by RedSeer Strategy Consultants unveiled that "Given the rising residential rents and the increasing confidence in the UAE's real estate market, the decision between renting and buying property has gained significant importance among local expats."

Furthermore, the survey noted that this change in consumer behavior reflects a growing inclination towards long-term stability and financial security, both of which are provided by property ownership.

Russian investors still dominate upscale property market

According to the RedSeer study, affluent expatriates from Russia continue to hold a strong presence in Dubai's luxury residential real estate market, as well as in the broader UAE market.

The study revealed that Russian buyers exhibit a particular fondness for villas, representing roughly two-thirds of their property investments. Interestingly, 80 percent of these transactions involve secondary sales, with an average value of $1.1 million, which is twice the market average, as highlighted by RedSeer.

Surge in local expat investments

Jha explained that in addition to the escalating rental costs, there are numerous other factors contributing to the anticipated increase in local expat engagement in Dubai and UAE's property market.

"The strong economic growth, stability, prosperity, and favorable regulatory environment of the UAE make property investment highly appealing for this demographic," noted Jha. Considering these factors, he believes that the trend of local expats entering property ownership is likely to continue.

According to the RedSeer study, Dubai, recognized as one of the world's fastest-growing economies, offers abundant opportunities for career advancement and a high quality of life.

"The UAE stands out as one of the most financially viable regions for real estate investment, boasting a lower price-to-income ratio compared to other areas of interest," the study stated.

While Dubai's real estate market has shown a significant recovery following the impact of Covid-19, it has only reached its 2019 price level and remains 20-25 percent below its peak in 2014.

Akshay Jayaprakasan highlighted that despite recent increases in real estate rentals and property prices in the UAE, people often overlook the fact that the region still offers one of the most attractive property price-to-income ratios globally, as he told Arabian Business.

"While the focus over the past year has been on affluent immigrants purchasing properties in the region, going forward, we expect current residents to play a crucial role in property acquisitions, especially considering the steep rise in rental rates," Jayaprakasan added.

Furthermore, Jayaprakasan emphasized that Dubai has evolved beyond being solely an appealing real estate investment destination, becoming a preferred long-term settlement choice for families. This transformation has been facilitated by various government initiatives aimed at deregulating the economy and attracting skilled expatriates.

Real estate agents vs Social media promos

The RedSeer survey also shed light on the emerging trend of social media posts and promotions playing a more significant role in buyers' decision-making process when it comes to property investments in the UAE.

According to the survey findings, "In today's digital age, real estate agents leveraging social media platforms have gained considerable influence within the real estate industry." They are increasingly utilizing digital media channels to advertise their services, build a following, and position themselves as real estate content creators. This phenomenon has blurred the lines between agents and content creators in the industry.

Joanne Chehab, Head of Business Partnerships for Managed Services, Global Business Solutions, MENA at TikTok, emphasized that the traditional approach to real estate marketing is no longer effective, as users are bombarded with an overwhelming amount of information in a highly competitive real estate market.

"In an era of information overload, buyers and renters are seeking authentic storytelling and visuals that provide them with a glimpse of their dream homes, even before physically viewing them," explained Chehab to Arabian Business.

She further stated that as buyers and renters increasingly rely on online communities for unbiased perspectives, real estate marketers have a lot to gain by engaging with the community on social media platforms like TikTok. By sharing authentic and relevant content, marketers can educate and entertain potential customers.

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Credits: https://www.arabianbusiness.com/industries/real-estate/revealed-local-expats-poised-to-drive-next-property-market-boom-in-dubai