Residential property prices in Dubai jumped 21 percent in the first ten months of the year as the emirate’s real estate sector continues to recover from the coronavirus pandemic on the back of an expedited vaccination program and other government measures.
The average home price rose to 1,235 dirhams per square foot ($336.28) in October from 1,021 dirhams per square foot registered in January, according to a report by global consultancy Knight Frank.
“The pickup in market sentiment has spread outward from the emirate and drawn attention to a new flavor of buyer, non-resident, ultra-high net worth individuals, who are flocking to the city for the first time to secure our most valuable asset,” said Faisal Durrani, Partner and Head of Middle East Research at Knight Frank.
“[The] Home sales over $10 million now account for 7 percent of all transactions in the city by value, compared to a long-term average of just 2 percent.”
The real estate market in the UAE, which has experienced a three-year low oil price slump that began in 2014 due to supply and pandemic concerns, is seeing a revival as people upgrade to larger homes with outdoor amenities amid an increase in remote work and online learning. .
Economic support measures and government initiatives – such as residence permits for those who have retired and remote workers as well as an expansion of the 10-year golden visa program – have also helped improve sentiment.
Durrani said the buyers are from various locations including Monaco, Switzerland and China.
“Developers are responding, pushing things hard and bringing to the market 10,000 dirhams per square foot, like the Alpago Palm Flower project. However, the modestly priced properties continue to deteriorate.”
The property developer said earlier this month that the Alpago Palm Flower project on The Palm will feature one residential unit per floor and be designed by British firm Foster + Partners.
However, residential values are still about 29 percent below their peak levels in 2014.
Meanwhile, villa prices have risen 14 percent since the pandemic began in January last year, as people have moved into bigger homes amid online education and a work-from-home culture, according to Knight Frank.
The city’s most expensive areas are recording the largest shift in values, with apartments in locations such as Palm Jumeirah and Downtown Dubai generally outperforming apartments since the start of the pandemic.
Similarly, prices for villas in Mohammed Bin Rashid City, Dubai Hills and Palm Jumeirah also jumped ahead of the broader villa market, “highlighting the disproportionate impact of positive market sentiment on luxury home values,” according to the report.
Home sales in September exceeded 12.2 billion dirhams, 100 percent more than the previous record of 6.1 billion dirhams recorded for the same month in 2009. Total sales fell to 11.2 billion dirhams in October.
“Dubai’s relative affordability, compared to other global cities, has been instrumental in increasing its popularity and it would not be in the interest of market stability to race prices beyond 2008, or indeed the 2014 peaks, within such a short period of time,” the master Durrani said.
Meanwhile, sales prices for apartments and villas in Dubai and Abu Dhabi jumped in the third quarter amid a broader recovery in the property market, real estate consultancy Asteco reported on Monday.
Sales prices of apartments in Dubai increased by 14 percent year on year in the three-month period, while prices of villas increased by 37 percent during the period.
Asteco said it expects growth momentum to continue towards the end of the year and into 2022, albeit at a lower rate, a trend supported by expected developments resulting from the successful implementation of Expo 2020.
“Government initiatives in terms of new visa programs and regulations to attract foreign investment, ease Covid-19 restrictions and successful implementation of vaccines are expected to boost the economy,” she said.
Rents for villas in Dubai rose by 19 per cent annually, while rents for apartments rose by 3 per cent.
In Abu Dhabi, villa prices jumped 14 percent in the three months to the end of September, while apartments registered a modest 1 percent increase. Meanwhile, villa rents in the UAE capital remained flat during the period, while apartment rents fell by 2 percent, according to Asteco.
Updated: November 29, 2021, 9:49 am