Dubai’s residential market recorded its highest quarterly price rise in a decade amid higher property demand in the emirate, a report by property consultancy ValuStrat has said.
The ValuStrat Price Index (VPI) covering Dubai’s residential market was up 6.1 per cent on a quarterly basis in the third quarter, with villa and apartment prices rising by 7.6 per cent and 4.8 per cent, respectively, during the period.
On an annual basis, the index increased by 15.1 per cent, with villa and apartment prices up 19.8 per cent and 11 per cent, respectively.
In the villa segment, The Palm Jumeirah, Jumeirah Islands, Dubai Hills Estate and Mudon recorded the highest capital gains during the quarter, while in the apartment category, Discovery Gardens, The Greens, The Palm and Dubailand Residence Complex were the best performers.
Prime properties also recorded capital gains in the third quarter. Prime property valuations rose by 16.5 per cent annually and 6.6 per cent on a quarterly basis, according to the report.
The VPI for prime villas reached a new 10-year high, with capital gains of 20.2 per cent year on year and 8.5 per cent quarterly.
Valuations of prime apartments rose 13.6 per cent annually and 5.2 per cent on a quarterly basis.
Dubai's property market has made a strong rebound from the coronavirus-induced slowdown, helped by government initiatives such as residency permits for retired and remote workers, and the expansion of the 10-year golden visa programme.
The economic gains generated by Expo 2020 Dubai and higher oil prices also supported the property market growth momentum.
Business activity in Dubai's non-oil private sector economy remained robust in September as sales growth hit its highest in more than four years amid improving demand.
The emirate's seasonally adjusted S&P Global purchasing managers' index reading rose to 56.1 in September, its strongest performance in three months, up from 55.0 in August.
Dubai’s economy expanded by an annual 3.2 per cent in the first half of 2023 to Dh223.8 billion ($60.9 billion), driven by the strong performance of the transport and storage sector, the latest government data shows.
The emirate recorded 11,308 ready or secondary home sales transactions during the third quarter, up 17.7 per cent compared with the same period last year, the ValuStrat data showed. This was equivalent to investments worth Dh26.4 billion.
The average ticket size of ready-to-move-in properties declined by 1.4 per cent annually to Dh2.3 million while 41.5 per cent of all ready home sales were priced less than Dh1 million.
There were 52 home sales worth more than Dh30 million during the three-month period, compared with 67 in the third quarter of last year, according to the report.
The citywide average transacted price for ready units during the third quarter was Dh14,077 a square metre (Dh1,308 per square foot), up 7.8 per cent annually.
Most transactions took place in Jumeirah Village, Dubai Marina, Business Bay, Downtown Dubai and International City.
The average ticket size for off-plan homes rose by 13 per cent annually to Dh2.5 million, with the citywide average transacted price for off-plan properties was at Dh20,035 a square metre.
“Mudon, Business Bay and Dubailand Residential Complex broke their individual monthly records for the first time with the highest number of off-plan properties traded during the third quarter,” the report said.
Off-plan Oqood, or contract, registrations rose 19.1 per cent annually, which equals Dh36.9 billion worth of investments.
Dubai residential rental values also jumped in the third quarter, according to the report.
Residential asking rents in the emirate rose 27.2 per cent in the third quarter when compared with the same period last year, with villa and apartment rents increasing by 38.7 per cent and 19.1 per cent on an annual basis.
Based on developer completion schedules, the number of new build units entering the market this year was estimated at 53,715 homes.
Total project completions in the first nine months of this year stood at 21,507 apartments and 2,068 villas, equivalent to 44 per cent of preliminary estimates for the whole of 2023.
During the third quarter, office sales transactions grew by 9 per cent, year on year, to 631. The median transacted price stood at Dh11,140 a square metre, up 28.4 per cent annually, according to the report.
In terms of sales volume, Business Bay retained its position as the most popular choice for office sales with a share of about 44.5 per cent, followed by Jumeirah Lakes Towers with 33 per cent of overall transactions.
Fixtures
Wednesday
4.15pm: Japan v Spain (Group A)
5.30pm: UAE v Italy (Group A)
6.45pm: Russia v Mexico (Group B)
8pm: Iran v Egypt (Group B)
if you go
The flights
Fly direct to Kutaisi with Flydubai from Dh925 return, including taxes. The flight takes 3.5 hours. From there, Svaneti is a four-hour drive. The driving time from Tbilisi is eight hours.
The trip
The cost of the Svaneti trip is US$2,000 (Dh7,345) for 10 days, including food, guiding, accommodation and transfers from and to Tbilisi or Kutaisi. This summer the TCT is also offering a 5-day hike in Armenia for $1,200 (Dh4,407) per person. For further information, visit www.transcaucasiantrail.org/en/hike/
FULL%20FIGHT%20CARD
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Essentials
The flights
Whether you trek after mountain gorillas in Rwanda, Uganda or the Congo, the most convenient international airport is in Rwanda’s capital city, Kigali. There are direct flights from Dubai a couple of days a week with RwandAir. Otherwise, an indirect route is available via Nairobi with Kenya Airways. Flydubai flies to Kinshasa in the Democratic Republic of Congo, via Entebbe in Uganda. Expect to pay from US$350 (Dh1,286) return, including taxes.
The tours
Superb ape-watching tours that take in all three gorilla countries mentioned above are run by Natural World Safaris. In September, the company will be operating a unique Ugandan ape safari guided by well-known primatologist Ben Garrod.
In the Democratic Republic of Congo, local operator Kivu Travel can organise pretty much any kind of safari throughout the Virunga National Park and elsewhere in eastern Congo.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
