Dubai property prices: where they are rising and falling

Property prices in Dubai continued to rise in May, with transaction volumes also growing as the emirate's real estate market makes a strong rebound from the coronavirus-induced slowdown.

Average residential property prices increased by 10.9 per cent in the year to May 2022, with apartment prices rising 9.6 per cent and villa prices up 19.8 per cent, CBRE said in its latest Dubai market report.

Month on month, prices rose 0.4 per cent for apartments and 1.2 per cent for villas in May, the report said.

The total volume of transactions in the market reached 5,542 in May, up 33 per cent from a year earlier.

“Transaction activity in Dubai’s residential market continues to remain on a strong footing, with total transaction volumes in the year to date [until] May 2022 reaching 30,903, the highest total recorded since 2009,” said Taimur Khan, head of research for the Mena region at CBRE.

“Price growth has also remained robust, despite the rate of growth slowing marginally from a month earlier.”

Check apartment price rises and falls in the slide show below

APARTMENT PRICES: Downtown Dubai rose by 0.5 per cent month-on-month in May to Dh2,045 per square foot (they were up 0.7 per cent in April). Reuters

Where were the highest price increases in Dubai?

The prime areas showed the most significant price growth in May amid strong demand and a supply shortage in the segment.

The market has been attracting high-net-worth individuals from around the world on the back of the UAE's strong economic rebound from the global pandemic-induced slowdown.

Allsopp & Allsopp recorded a 50 per cent decline in ultra-prime properties coming to the market when comparing May 2022 to May 2021, chief executive Lewis Allsopp told The National earlier this month.

While demand is increasing, supply has remained stagnant, he said.

“Most ultra-prime property owners are holding on to their properties unless there is a need to sell,” he said.

Palm Jumeirah apartments recorded a 4.2 per cent price rise, month on month, in May while villa prices on the man-made island increased 5 per cent. This follows similar rises in April.

Properties in Meydan City and Jumeirah Golf Estates also posted price rises last month.

In terms of the highest average sales rate per square foot, Downtown Dubai topped the list for the apartments segment at Dh2,045 while Palm Jumeirah led the villas segment, with prices at Dh3,207.

While average prices per square foot stood at Dh1,102 for apartments and at Dh1,307 for villas in May, they remain 25.9 per cent and 9.5 per cent lower, respectively, when compared to the highs witnessed in late 2014, CBRE said.

Inflationary pressures

Inflation in Dubai accelerated to an annual 4.6 per cent in April, from 1.1 per cent in December 2021. The UAE's consumer price index rose 2.5 per cent in 2021, according to official data.

Property consultancy Knight Frank said the level is “relatively tame compared to the rest of the world”.

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The UAE Central Bank raised its interest rate by 50 basis points last month, in line with the US Federal Reserve board's decision to increase its key interest rate.

More rate increases are expected during the rest of this year, including one this week.

However, Knight Frank said it does not expect rate increases to affect the stability of the Dubai residential market.

During the first five months of 2022, mortgage buyers accounted for about 18 per cent of the residential market, by value of deals, compared to about 40 per cent last year and 52 per cent in 2007, it said in a report.

“Right now, the bulk of deals at the top end of the residential market are cash purchases, in large part due to the unrelenting influx of ultra-high net worth capital targeting Dubai’s most expensive homes,” it said.

“A persistent and intensifying wave of UHNWI capital from markets as varied as Monaco, Singapore, Hong Kong, Austria, Switzerland and even mainland China continues to zero in on the emirate’s residential real estate market.”

Looking ahead, while property prices are continuing to increase, they are unlikely to rise by 60 per cent again this year.

“It is unsustainable and unhealthy for the market, so price increases will undoubtedly be less vigorous,” Knight Frank said.

With price growth expected to hover at about 5 per cent to 7 per cent this year for Dubai's mainstream market and 12 per cent to 15 per cent for the prime properties, “residential property in the emirate is still an excellent inflation hedge”, the consultancy said.

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