Dubai - first quarterly property price rise for 7 years

ValuStrat Price Index shows average quarterly improvement of 0.8% as Q1 sees accelerated positive trends for the first time since 2014

Average quarterly residential property prices in Dubai rose for the first time in seven years in the first three months of 2021, according to new data released by real estate consultants ValuStrat.

The ValuStrat Price Index (VPI) showed an average quarterly improvement of 0.8 percent, as the first three months of the year saw accelerated positive trends for the first time since 2014.

All established freehold villa locations monitored by the VPI saw capital values improve since the previous quarter, ranging from 1.8 percent to 5.4 percent.

However, only half of apartment locations improved in value with some areas seeing declines of up to 2.8 percent.

On an annual basis, all locations witnessed price drops, some in single digits.

Best performing freehold areas were International City, Arabian Ranches, The Meadows, The Lakes and Palm Jumeirah.

Citywide, residential capital values were 10.9 percent lower than the same period last year.

“A positive trend which commenced in the second half of 2019, only cut short by the Covid-19 restrictions last year... now as we welcomed 2021, that trend has intensified with improved investor confidence, boosting demand, with record number of title deeds registered, and a gradual growth towards previous peaks,” said Haider Tuaima, head of real estate research at ValuStrat.

The Dubai VPI for residential rents stood at 61.9 points and remained stable quarterly for the first time in two years.

ValuStrat said the average residential annual rent in Dubai stands at AED76,910 - apartments at AED55,000 and villas at AED211,485.

ValuStrat added that Dubai’s residential net yields averaged 6.1 percent, with apartments at 6.4 percent and villas at 4.9 percent while residential occupancy in Dubai was estimated at 80 percent.

As far as residential supply is concerned, 2020 saw the completion of total 36,015 housing units of which 27,435 were apartments and 8,580 were villas/townhouses, the ValuStrat research showed.

For 2021, estimated upcoming supply currently stands at 46,316 apartments and 10,563 villas/townhouses. Approximately 7,294 units finished construction during the first quarter, equivalent to more than 12 percent of total expected supply this year.

Declan King, managing director and group head real estate, ValuStrat, said: "Improved buyer confidence appears evident in many parts of the Dubai residential market, with statistics showing increased numbers of sales transactions and price rises.

"Anecdotal agent evidence confirms strong demand and speaks of faster sales campaigns and competitive bidding occurring between some purchasers, especially in villa communities and now also in some of the more sought-after apartment locations too.

"Influence of Covid on housing requirements, and an undersupply in some communities and sub-sectors are factors as to why this is happening - other reasons may also include a perception that prices had actually over corrected and that perhaps they now represent good value, with potential for upside gain should this prove not just to be a temporary phase and the market continues to recover."

ValuStrat said Dubai’s office capital values remained relatively stable on a quarterly basis, with Dubai International Financial Centre (DIFC), Jumeirah Lake Towers and Downtown Dubai gaining 6.8 percent, 2.3 percent, and 3.8 percent respectively.

Construction of an estimated 3.1 million sq ft of workspace was completed in 2020. Available data on remaining office space under construction is estimated at 1.1 million sq ft expected for delivery this year.

Office sales transaction volumes during Q1 were 41 percent higher when compared to the previous quarter and up 45.7 percent in a year.