Last month, sales in the UAE real estate sector fell for the first time in 2023, as the country saw a 33% drop in transactions in April 2023 compared to December 2022. Sales in the secondary market fell by 2.4 per cent, but sales transactions in the off-plan sector surged 42.5 per cent year-on-year (YOY) in April, sustaining growth in the Dubai real estate market, according to ZāZEN Properties, the UAE's leading sustainable property developer.
Investors prefer to buy off-plan properties over ready-made real estate projects as such developments can have a return on investment (ROI) of up to 10 per cent, depending on location, quality of construction and choice of amenities. With the stability of the UAE economy, especially when compared to the rest of the world, overseas investors are increasingly turning to Dubai as a safe way to invest in all sectors, and more so in the real estate sector. As a result, many rationalise the slowdown in sales transactions in April as a temporary trend, a by-product of factors such as Ramadan, shorter working hours and the holiday season.
Demand for flats has been particularly high as the UAE has no property tax or rental income tax and is known to offer a more profitable return on investment than other countries, thanks to steady demand from local residents and tourists. It has also seen developers increasingly building units that meet modern needs. In line with this agenda, green development has also seen greater interest in recent years. This trend is expected to continue for the foreseeable future, and initiatives like the Dubai 2040 Urban Master Plan and Zero Emissions UAE 2050 require immediate change to promote future prosperity.
A recent survey of over 1,000 respondents revealed that 61% of people living in the UAE believe that climate change is real and they believe that human activity is the main cause. In addition, 35% of participants believe that technological solutions must be adopted; 61% are prepared to pay more for everyday items made from recycled materials and 63% said they would be willing to pay a little more for a property that emits less carbon (CO2).
With 2023 declared the year of sustainability and the 28th Conference of the Parties (COP28) just around the corner, property developers will play an increasingly important role in the UAE's ability to meet global and regional green targets. This will continue to be the case as the UAE is ranked number one in the world for talent attraction, which will help achieve the Dubai 2040 goal of doubling the UAE's population to approximately 6 million people over the next 17 years; sustainable housing infrastructure will be required to accommodate this influx of residents.
Madhav Dhar, co-founder and COO of ZāZEN Real Estate, said: "The UAE is growing at an accelerated rate compared to other countries around the world due to a variety of factors, including the country's diverse population of over 40 different nationalities. Dubai's unique economy is being supported by initiatives such as D33, along with a new breed of home seekers willing to stay in the emirate for the long term, contributing to the health of real estate in the UAE. In addition, as we move closer to a sustainable future for the world, we will see a greater focus on green integration in the off-plan projects of domestic and regional developers. All of these aspects, coupled with other incentives such as tax incentives and the increasing number of golden visa issuances, will help sustain overall real estate growth in the market, especially in the face of slower performing months."
Despite a slowdown in sales transactions in April 2023, the UAE's real estate sector has consistently thrived with a new strength in recent years. Industry analysts suggest that this momentum will continue, at least for now, and ZāZEN Properties has seen this sentiment in its current project, ZāZEN Gardens in Al Furjan. As the first and only LEED Gold residential development in Dubai, 95% of the units have been sold since sales began, leaving only 10 available units. ZāZEN Gardens will be a significant contributor to achieving the UAE's environmental goals, as it will reduce CO2 emissions by approximately 470 metric tonnes per year by the time the building is scheduled to be handed over in April 2024. Residents of this community will enjoy modern, spacious units complemented by quality amenities and integration of well-being such as feng shui. Similarly, ZāZEN Gardens' convenient location near the Gardens metro station and the upward trend in UAE real estate will allow investors to see strong returns on their investment.