Page 80 - SOBHA REALTY PR REPORT NOVEMBER 2023

11/27/23, 2:03 PM Dubai: Here's why property prices will continue to rise in 2024
“The government’s continued push to make the city attractive to investors, tourists and residents is
expected to underpin the positive market sentiment, job creation and in-turn population growth across
income segments.

“We expect global wealth to continue gravitating to Dubai due to its favourable socio-economic

positioning and developers launching products to cater to this demand resulting in high-ticket
transactions. We also foresee overall transaction volumes to be steady due to a strong owner occupier
and investor demand,” she added.

The property market, which has evolved over the past decade, has two distinct types of buyers. The first

is UAE-based residents for whom affordability has weakened as property prices have risen, coupled with
higher inflation and interest rates. The second investor type includes high-net-worth purchasers or
millionaires who continue to support off-plan demand, some of which are based in the UAE.

“Most of these are cash buyers who are less sensitive to inflationary pressures and rising interest rates
as compared to mortgage-financed buyers. The proportion of cash buyers has increased considerably in

the last two years, benefiting from the UAE’s reputation as a safe haven,” it said.

For example, according to Moody’s, nearly 60 per cent of Sobha Realty’s total sales in 2022 were to non-
UAE residents, most of whom were cash buyers. On the other hand, UAE-based buyers make up the
bulk of development sales for Aldar in Abu Dhabi and more than half for Emaar Properties in Dubai.

NEW PROJECTS
UAE homebuilders continue to launch new projects, with demand even stronger than before the

pandemic. New supply is steadily increasing as around 80,000 units

are under construction this year in Dubai and Abu Dhabi, according to real estate data companies Reidin
and JLL.

Global ratings agency Moody’s expects homebuilders margins will also improve in the next 12-18

months.

“A number of developers have launched new projects in the past 18 months and off-plan sales have
picked up significantly since. This has led to a significant increase in revenue backlogs across the board
for developers,” Moody’s said, adding that the launch of new projects, coupled with the increase in
demand, has led to an increase in gross margins across the board.

“UAE-based homebuilders are in a good position to capitalise on the growth opportunities in their

domestic market. We expect leverage and Ebit to interest expense ratios to remain strong across the
board. These companies continue to launch new projects and collect the bulk of the cash flow ahead of
project completions,” Moody’s analysts said.

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