Real estate in the Emirates: steady growth with local risks of price decline

The real estate market in the United Arab Emirates (UAE), and in particular in Dubai, is showing impressive resilience. April 2024 saw a record 17.9 thousand residential property transactions, an increase of 55.4% compared to the same period last year. However, despite the overall positive dynamics, there are local factors that can lead to lower prices and rents in certain areas. It is important to understand these risks in order to make an informed investment decision.

One of the key factors is the competition of new, modern communities. The modern buyer prefers properties in areas with developed infrastructure, including green areas, convenient transport (proximity to the metro, good road junctions), smart technologies and a wide range of social facilities. This creates pressure on older areas with outdated buildings and underdeveloped infrastructure.

According to CBRE, in 2024 the difference in price per square meter between old and new areas reached an impressive 20-30%. This means that investing in real estate in less attractive locations can bring lower profits or even losses.

Another important point is the loss of popularity of the location among tenants. If the area is not developing and does not meet modern requirements, it loses its attractiveness for potential tenants, which directly affects the return on investment. The main reasons for the decrease in demand for rent in specific areas:

• Weak infrastructure: the lack of schools, kindergartens, medical institutions, shopping centers and other social infrastructure facilities makes the area less comfortable to live in.
• Transportation problems: traffic jams, distance from major transport arteries and metro stations, lack of convenient parking - all this reduces the attractiveness of the area.
• Ecological and noise issues: lack of landscaping, proximity to industrial areas, high traffic congestion - these factors negatively affect the quality of life and, accordingly, demand.

Thus, although the UAE real estate market as a whole demonstrates steady growth, investors need to carefully analyze a specific area when planning to purchase real estate. You should not rely only on general positive statistics. It is necessary to assess the development prospects of the area, its infrastructure, transport accessibility and environmental conditions. Ignoring these factors can lead to a decrease in the value of the property and a decrease in rental income.

Professional consultation with UAE real estate specialists before making a purchase decision is a necessary step to minimize risks and maximize profits.