Dubai's property market closed a record-breaking year with further price rises, according to a new report.
The 8,662 real estate transactions in Dubai in December took the total number of transactions in the year to 90,881, exceeding the previous high of 81,182 in 2009, property consultancy CBRE said in its latest Dubai Residential Market Snapshot.
Sales prices for apartments rose 0.6 per cent month on month to an average of Dh1,168 ($318) per square foot, while villa prices rose 0.8 per cent to an average of Dh1,385 per square foot over the same period, CBRE noted.
Average property prices increased by 9.5 per cent during the course of the year, with apartments up 9 per cent and villas up 12.8 per cent.
In the apartment segment, Jumeirah remains the most expensive area to buy per square foot at Dh2,324, while for villas, Palm Jumeirah registered the highest sales rate per square foot at Dh3,921.
Dubai apartment prices
Prices on Palm Jumeirah rose throughout 2022 along with other prime areas of the city amid a shortage of luxury villas.
Prices rose across other market segments as well on the back of the UAE's broader economic recovery following the pandemic-induced slowdown.
However, average prices have not yet surpassed the record highs of 2014, with the average apartment price being 21.5 per cent below the 2014 level, and villa prices 4.2 per cent lower than the peak.
Rents have also experienced rapid increases across the city, as the economy benefitted from an influx of high-net-worth individuals as well as the introduction of new visa schemes that encourage residents to stay for longer or move from abroad.
"Residential rental growth also reached historic levels, with apartment and villa rents increasing by 27.1 per cent and 24.9 per cent, in 2022, respectively," said Taimur Khan, head of research for the Mena region at CBRE in Dubai.
"Due to the lack of available villa stock for rent and growing demand levels for such stock, villa rents are now 45.3 per cent higher than in 2019, with average villa rents standing at Dh282,150, once again the highest level on record.
"Over the same period, average apartment rents are 17.2 per cent higher and stand at Dh95,168."
While the rapid growth may be welcome news for landlords who had seen almost six years of softening rents until 2022, it will impact demand, he said.
The rise in rents in Dubai has led to an increase in rental disputes and eviction notices as landlords seek to make the most of the market conditions.
"In the year ahead, we expect that both the average rates of price and rental growth will remain positive. However, we expect the rates to moderate and in certain more nascent communities with strong supply pipelines, to decline," Mr Khan said.
The top areas to buy apartments in 2022 were Business Bay, Dubai Marina, JVC, Downtown Dubai, Dubai Creek Harbour and Palm Jumeirah, according to Zoom Property Insights.
Business Bay led the way with 10,300 transactions valued at a total of Dh17.6 billion, followed by Dubai Marina with 7,430 transactions.
“The contribution of each sector of the market has played a vital role in the booming success of Dubai real estate," said Ata Shobeiry, chief executive of Zoom Property.
"With various new developments joining the bandwagon, 2023 will see the property market reaching new heights of success.”