Will 2022 offer more growth momentum for Dubai real estate?
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2021 has turned out to be a banner year for luxury real estate in Dubai, reaching the climax of âBlack Fridayâ and catching almost everyone off guard. As the year progressed, mid-range real estate also started to recover, albeit from a much lower baseline with moderate increases, signaling an increase in confidence. as companies began to stabilize.
The price cycle was a near-mirror image of what happened in the first expansion cycle of 2011-12, with luxury leading the fray, followed by the mid-market. Overall, with payment plans continuing to be the primary driver of new sales, this trend is expected to repeat this year, especially as headwinds from a rising interest rate cycle enter. in play. In this sense, repetition itself can be a pleasure: it creates and fulfills an expectation at the same time, and provides an illusion of control.
We get what we expect – and what we want. This is the satisfaction of the fictional formula: we know that the mystery will be solved and that all will be well in the end. But it can also be a painful rehearsal of being stuck, helpless, in a pattern, in the grip of an obsession, a habit that we can’t break.
With repetition, the story becomes a cliché, a dead metaphor that has lost its figurative power. Yet, as the Dubai experience indicates, the history of each price cycle has led to the birth of new communities that benefit tens of thousands of investors and end users, through a process of gentrification, relaunch of stalled projects and re-zoning opportunities that lead to a more efficient allocation of capital in the future.
Unlock the value of blocked projects
In 2022, while these themes will continue to be perpetuated, the accelerated pace of change is reflected in punctures in the world of the unconscious, anxieties and deep desires. It is this aspect that is the most derided in the analytical literature, because first-time buyers remain the holy grail for most developers.
For investors caught in the cycle of blocked or delayed projects, the propensity to invest again becomes the main obstacle. This remains the determining factor for which relaunching projects will continue to play a major role this year, especially as value discovery has come back to the fore in developed communities like Dubai Marina, Jumeirah Village, business bay and parts of Dubailand. This is even more visible in the communities to come. But the scalable solution – which at the high end involves end-users building their own villas and / or protracted litigation punctuated by sales below replacement value to struggling homeowners – hardly constitutes a gambling outcome. non-zero sum.
Everything is still at stake
Even though brokerage houses offer “trading mechanisms” (which is ultimately a simplistic mechanism of incorporating higher prices into newer projects), the ultimate goal remains the unraveling and unblocking of equity securities. these delayed projects, a process we have seen in other parts of the world. There is no doubt that these projects are an externality of rapid urbanization. Yet, as 2021 has shown, these externalities can be overcome and where they have been, it has enabled affected investors to renew their confidence in the market.
The image then, which we see swimming in the focus, is that of a city with a direct gaze that calls out, a half-smile that knows everything that awaits it.
The scorching pace of 2021 is unlikely to be repeated. But there will be common repeating themes; namely the renewed emphasis on mid-range housing, attracting first-time buyers and inspiring existing homeowners to move up the ranks. These stories have been told and scrutinized over and over again. Further, what we hope for is a laser-like focus on investors who have not fully participated in the upside of years past.
The reforms, along with the price action and inflow of capital have been the perfect cocktail to induce activity on this front so that the demand curve (rather than the obsession with supply) can rise d ‘a shot. If the 2022 Stories can include in its number of winners those who managed to break the patterns of the past, the market will surely have catapulted itself into the next evolutionary stage.
It has been a long time coming. Dubai’s history suggests that this is now inevitable.
– The author is Managing Director of Global Capital Partners.
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