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.