- Emirate has also seen record-breaking 93 ‘ultra-prime home’ sales in 2021
Dubai’s residential property market experienced a significant increase in prices in the past 12 months as the city saw an ease in pandemic-related restrictions and the success of Expo 2020, according to global real estate consultancy Knight Frank. Prime residential prices – encompassing the Palm Jumeirah, Emirates Hills and Jumeirah Bay Island – in particular saw a huge surge, rising by 58.9%.
Overall, house prices in the city grew by 10.6% last year and rose by a further 2.6% during the first three months of 2022. The latest increase leaves values 11.3% higher than Q1 2021; the highest rate of annual growth since January 2015.
Faisal Durrani, partner – Head of Middle East Research, Knight Frank, put this down to “positive market sentiment, driven by the government’s world-leading response to the pandemic, coupled with the successful hosting of the World Expo, the reopening of travel corridors and Dubai’s global safe-haven status continues to underpin the market’s rebound.”
Data revealed that Palm Jumeirah – a series of artificial archipelagos where overall prices increased by 38.6% – registered villa price growth of 10.9% during Q1 alone, with the priciest villa ever sold in Dubai transacting on the iconic island during March for a record AED 280 million.
Similarly, in the exclusive Emirates Hills – a prestigious gated community made up of around 600 villas and home to mostly high-net-worth individual (UNHWI) from the Indian subcontinent as well as Iran and Western Europe – the rate of annual villa price growth stood at almost 20% at the end of Q1. The period between January and March registered a price rise of 6.5%.
The two areas “continue to cement their iconic status, with global buyers continuing to jostle for an address in Dubai’s most exclusive enclaves,” said Durrani.
The market also saw a record breaking 93 ‘ultra-prime home’ sales in 2021 – these are homes priced at over US$10 million. In the first quarter of 2022, Knight Frank has already recorded another 32 ultra-prime deals.
Meanwhile, Durrani noted that despite the sharp turnaround in prices, values are still, on average, about 25% below their 2014 peak. Villas are now just 12.9% below the last market high in 2014.
The report also said there is growing disparity in buyer and seller expectations — a trend that’s starting to have the effect of causing average price increases to slow. Overall villa prices grew by 3.2% during Q1, down from 3.4% in the final three months of 2021, marking the slowest quarterly increase in over two years.
But Durrani said “this slowing price growth is not uniform across the board, with the city’s most expensive locations are still locked in Dubai’s version of the ‘Roaring Twenties’. This outperformance is being fuelled in large part by the influx of overseas UHNWI capital that continues to target Dubai’s most luxurious homes.”
Andrew Cummings, partner – head of Prime Residential at Knight Frank Middle East, said demand remains at record levels, with international buyers along with domestic end users searching for larger homes.
“This coupled with a lack of supply of quality homes continue to fuel price increases,” he said, adding that “recent changes to visa laws, which enable investors and end users to obtain ‘golden visas’ for off-plan purchases and using mortgages is also likely to have a positive effect on the market.”
Last month, The National quoted brokers as saying that changes to the UAE visa residency system, set to kick in from September, will mean an increase in property buyers.
At the time, Cummings had told the publication the new rules were “a further step in opening up Dubai to foreign investors and will likely lead to a significant influx in buyers, bolstering an already active market.”
“The changes to enable off-plan investors to also gain residency will have the biggest impact, and we are likely to see a increasing demand for off-plan properties, with buyers no longer being restricted to having to have a title deed of a ready property in hand.”
Back in January, Property Finder said the total value of property transactions in Dubai broke a 12-year record in 2021, hitting AED151.07 billion. Around 40.4% of all transactions were for off-plan properties - property available for purchase before it has been constructed.
Last month, Sheikh Hamdan bin Mohammed Al Maktoum, Dubai’s ruler, approved $1.7 billion package of housing and land parcels to benefit more than 4,600 citizens in the emirate. The plans involves constructing 1,110 villas and town houses.