What was the general market movement in Dubai in Q2?
It was a quarter of recovery as rental rates rose – significantly in some areas – from the lows experienced during the early stages of the coronavirus pandemic last year.
Average apartment rates climbed 3 per cent during the three months to the end of June, while average villa rates rose 8 per cent, according to data from property consultancy Asteco.
Average apartment rates were, however, down 3 per cent year on year compared to villas rising 10 per cent annually.
Increased demand for more sizeable properties has come with many tenants still working from home and keen to use more private space and amenities.
There were smaller rises in popular areas such as Dubai Marina and JBR, but villa developments such as Arabian Ranches and Victory Heights in Dubai Sports City posted double-digit increases – both quarterly and annually.
While it is difficult to predict how long the revival will last in global economic headwinds, Asteco said the upcoming Expo (October 2021) is expected to lift real estate demand "for the short term".
CBRE saw a similar trend, with apartment rates falling on an annual basis, but villa rates up 10 per cent since early last summer.
"Apartment rents are expected to remain lower in 2021 compared to a year earlier, whereas given relative supply levels and occupancy rates, we expect that while the rate of growth in villa rents will remain positive, we will see moderation in the rate over the course of the year," the real estate broker said in its Q2 Market Review.
Tenants are continuing to pay in more cheques rather than the traditional single payment seen a number of years ago.
"I predict we will see this happen more and eventually we will see rent payments in one upfront payment becoming a thing of the past," said Lewis Allsopp, chief executive of Allsopp & Allsopp.
He added that his company reported a lot of rental renewals during the second quarter as tenants were willing to pay an increase in rent rather than pay the moving costs and the increasing prices in the market.
What about supply of new units?
CBRE said the delivery of new supply was "relatively constrained", especially when compared with scheduled levels. It said that early estimates for the year were for 83,000 units. In the year-to-date, 18,616 units have been delivered, with an additional 37,466 scheduled to be delivered over the course of 2021, it added.
Asteco, meanwhile, described the delivery as "significant volume" despite lower than anticipated numbers.
"Q2 2021 recorded the completion of approximately 6,650 apartments, 1,500 villas and over 1 million square feet of office space," it said.
"There has been an increase in the number of new project launches (off-plan, under construction and completed developments), which were by and large well received by investors and end users alike." Asteco projects a further 24,500 new units in the second half of the year.
It may be more of a third quarter trend than second quarter, but Allsopp & Allsopp reported a 107 per cent rise in booking inquiries for short-term lets in the two weeks following the UAE being added to the UK’s amber coronavirus list.
“We are seeing a lot of UK nationals enquiring for a maximum of two-month stays in our short-term lettings units," Mr Allsopp said.
"This is mainly because they are unsure as to which area they would like to be in when committing for a long-term basis or while they wait for their visa and Emirates ID to complete the long-term process.
"Short-term lettings are growing ever popular within the expat community, especially with those who are looking into life as an expat in Dubai. The inquiries we are receiving are for trial runs in a ‘home’ environment and people coming over for interviews and looking for jobs.”
Have Dubai property prices been rising?
Yes. Sales transactions in Dubai hit a 12-year high in July, with the emirate registering 4,384 sales deals worth Dh11.18 billion, according to listings portal Property Finder.
Meanwhile, the city's prime residential market recorded a 43.8 per cent surge in sales volume in the second quarter of 2021, compared with the previous quarter, according to Luxhabitat Sotheby’s International Realty.
“The post-Covid resilience of the UAE’s economy is attracting immense wealth from across the world and, especially, from Europe, England and the Americas,” said Chris Whitehead, managing partner of Luxhabitat Sotheby’s International Realty.
Four villas, three on Palm Jumeirah, have sold for more than Dh100 million this year, with the most expensive being a XXII Carat (Club Villas) property for Dh119.5m. A villa in the Dubai Hills Estate also recently sold for more than Dh100m.
And, in recent weeks, a record was set in Dubai for the most expensive rental in the city to date – Dh3.8m.