Real estate's impact on Dubai's economy has doubled in just one year

Dubai's real estate sector is scoring major improvements despite tough economic conditions affecting the entire region. An annual report conducted by the Dubai Land Department (DLD) revealed that the first five months of 2019 saw significant improvement in the value of real estate transactions and investments. Within this period of time, transactions in the industry reached 106 billion dirhams ($28.8 billion) compared to 95 billion dirhams ($25.8 billion) in 2018, marking a growth rate of 12 percent.

The study - which was released on Tuesday - also found that the real estate sector's contribution towards Dubai's GDP almost doubled to 13.6 percent in 2018 as compared to 6.9 percent in 2017. In addition, the emirate's construction sector recorded increases in GDP contributions which reached up to 6.4 percent in 2018, compared to 6.2 percent in the previous year. 

DLD's annual report also showed that Dubai's real estate sector progressed in global competitiveness indicators in recent months. 

The UAE delivered outstanding results in the "ease of doing business index," ranking 11th globally among 190 countries. This came as a result of improvements made in a number of sectors, including the real estate industry. In fact, the field advanced three ranks in the 2019 Real Estate Registration index, ranking seventh globally.

Sultan Butti bin Mejren, Director General of DLD, said while improvements have been made in the emirate's real estate industry, more needs to be done to sustain development. 

"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," he said. 

"On the other hand, we should ensure transparent communication and openness to all investors and other parties in this sector," he added. 

In 2018, over 53,000 real estate transactions worth 223 billion dirhams ($60.7 billion) were registered in the country. There were also significant rises in field investments, which reached 80 billion dirhams ($21.7 billion) via more than 41,000 investments contributed by over 31,000 investors from all over the world.

"The real estate investment results indicate an increasing growth in the number of corporate investors compared to individual investors," the report stated. 

In 2017, individual investors made up 62.8 percent of total investments compared to 59.8 percent in 2018. Corporate investors jumped up from 37.2 percent in 2017 to 40.2 percent 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 report added.

The latter revealed a rise in the number of new investors joining the emirate's real estate market. 

According to the study, 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 include residential apartments, villas, and villa complexes. Once completed, these units are expected to add around 8,000 new residential spaces to the local real estate sector. 

When it comes to demand, DLD's study showed sales made up the largest percentage of real estate transactions in 2018, taking up more than 63 percent of their total number. In terms of rents, Dubai's growing population and its ever-expanding expat base were reflected in the number of leased real estate units.  

Dubai's Business Bay area ranked first in the number of real estate transactions and maintained the first position in transaction value with over 11 billion dirhams ($29.9 billion).