Dubai house prices rise at their fastest pace in seven years

The emirate registered 128 transactions valued at Dh20m or more during the first six months of this year, the highest level since 2015, Knight Frank says

Dubai clocked sales of more than 6,000 ready homes worth Dh13.5 billion and 3,600 off-plan properties worth Dh5bn in the three months from January to March.

The volume of ready home sales increased 76.1 per cent on annual basis, while off-plan sales declined 30.2 per cent.

When compared to Q4 2020, ready home sales were up 17.4 per cent and off-plan sales were 8.9 per cent higher in Q1 of 2021, according to ValuStrat.

Prime and central locations such as The Springs, Dubai Marina and Arabian Ranches are seeing an increase in demand, as people who were earlier priced out of these communities now find it affordable.

Certain pockets of the market are rebounding faster than others, with multimillion dirham home sales registering a rise in deal activity.

On an annual basis, all locations in Dubai witnessed price drops, some in single digits, in Q1 2021.

Residential capital values in Dubai in Q1 2021 were 10.9 per cent lower than the same period last year, according to ValuStrat.

Approximately 7,294 residential units were constructed in Dubai during the first quarter of 2021.

Total residential supply for 2021 is estimated at 46,316 apartments and 10,563 villas/townhouses, a ValuStrat report said.

Dubai recorded 128 transactions of houses valued at Dh20 million or more during the first six months of this year, the highest level since 2015.

Dubai house prices rose at the fastest pace in seven years in the second quarter of 2021 as the property market gains momentum amid the emirate’s continued economic recovery from the Covid-19 pandemic, according to Knight Frank.

Average transacted prices rose by about 1 per cent quarter-on-quarter to Dh1,156 per square foot for property in Dubai, the commercial and tourism centre of the Middle East, during the period from April to June this year.

This marks the first time the market recorded a consecutive gain since 2014, the property consultancy said in its latest research report.

Certain pockets of the market are rebounding faster than others, with multimillion dirham home sales registering a rise in deal activity.

Dubai recorded 128 transactions of houses valued at Dh20 million or more during the first six months of this year, the highest level since 2015, when 137 deals in this price bracket were recorded. The emirate registered only 75 deals of Dh20m-plus houses in 2020, according to the report.

“The momentum that began building late last year has been sustained,” said Faisal Durrani, partner and head of Middle East Research at Knight Frank.

“The confidence that has been injected into the economy by the government’s phenomenal response to the pandemic has percolated across the economy – buyers feel more confident about life and are committing to home purchases in increasing numbers.”

The UAE property market has softened on the back of a three-year oil price slump that began in 2014. Oversupply concerns and the Covid-19 pandemic added to headwinds in the subsequent years.

However, government measures to stem the spread of the pandemic, the coming Expo 2020 and growing demand for larger homes amid a rise in remote working has helped the market to bounce back.

Economic support measures and government initiatives such as residency permits for retirees and remote workers and the expansion of the 10-year golden visa programme have also helped to improve sentiment.

Dubai’s prime residential market recorded a 43.8 per cent quarter-on-quarter surge in sales volume in the second quarter of 2021.

About 4,681 apartments and 818 villas were sold for Dh16.7 billion, Luxhabitat Sotheby’s International Realty said in a report earlier this week, quoting Dubai Land Department data.

While average prices are still lower than the previous peak, certain buyer groups have weathered headwinds. Some investors have recorded significant price appreciation in their investments on the back of currency wobbles against the UAE dirham since the summer of 2015, Knight Frank said.

“Egyptian pound purchasers, for instance, have seen their investments appreciate by an impressive 51.4 per cent while Pakistani rupee buyers are currently enjoying gains of over 12 per cent,” said Mr Durrani.

"If we rewind further back in time to the heady days of 2007, Egyptian and Pakistani buyers would have seen their investments increase in value by a staggering 200 per cent plus."

British pound buyers can find a residential property in Dubai about 19 per cent cheaper today than in 2015. Indian rupee buyers can avail a 14 per cent discount while those buying in euros can grab 32.3 per cent discounts, “which is why buyer groups from these locations are so active in the market”, according to Knight Frank.

“It is still early days but as the global economy revs back up to full steam, some of these currency discounts are already showing signs of stabilising or even reversing, which will, no doubt, up the ante for those who have been waiting on the sidelines for the right time to invest,” said Mr Durrani.