In the ‘Year of the Fiftieth,’ residential property values in Dubai and Abu Dhabi have expanded at their fastest pace since 2015.
An array of favorable factors have propelled the market to such a remarkable level of buoyancy, according to property consultants. This includes the astonishing speed of recovery from Covid-19 and the overall rebound in the economy as a result of investor- and resident-friendly reforms, as well as the overall improvement in the business environment.
“The market is roaring back to life. The emerging euphoria around the fact that the UAE has the pandemic so well and truly under control, coupled with the excitement around the much-anticipated World Expo are adding to the confidence that is taking hold in the residential market,” says Faisal Durrani, partner – head of Middle East Research at Knight Frank.
Dubai’s world-leading response to the pandemic has caught the attention of wealthy people who have continued to flock to Dubai to buy the most expensive homes at the most expensive locations like Palm Jumeirah and Jumeirah Bay. Knight Frank says this contributed greatly to the rise in villa values.
According to property portal Houza, Dubai is poised to become a major tourist hub after experiencing a boom in tourism spurred by Expo 2020, as Europe resorts to additional security measures.
Tourist activity boost
Houza’s chief commercial officer, Matthew Gregory, explains that Dubai experiences a boost in tourist activity every year as the weather cools off and families choose to spend the holidays abroad. “However, this year, there’s no doubt Expo 2020 has spurred visitor numbers to a new level. Coupled with us all getting moving again after the ease of Covid-19 restrictions, it’s a recipe for the busiest season yet.”
“Villa prices in Dubai are provisionally up by five percent in Q3 and nearly 17 percent higher than they were at this time last year.
With three months left in the year, the number of homes sold for more than $10 million has risen to 54, smashing the previous record of 31 set back in 2015.
Prime areas
Almost 75 percent of super-prime homes sold in Dubai are found in the Palm Jumeirah and Emirates Hills, but new markets such as Business Bay are joining the exclusive list of locations to sell properties worth $10 million or more.
“Excellent governance has always been a defining feature of the United Arab Emirates. And the post-Covid bounce currently underway in Dubai’s real estate market, which is driving the emirate’s third property cycle, is a reminder of the authorities’ phenomenal response to the pandemic,” says Durrani.
Zoom Property’s Ata Shobeiry said the increase in average property prices is a good sign for Dubai’s property market after the Covid-19 setback.
“A strong recovery has paved the way for an even better 2022. While there are many factors that led to the quick recovery, the remarkable response to the pandemic by Dubai authorities deserves a mention as it helped the market to stand on its feet again,” he said.
“Expo 2020 is also playing its part as the demand for ready properties has risen in Dubai, particularly in areas located close to the expo site,” he added.
Most expensive areas
Knight Frank reports that the most expensive areas in Dubai are experiencing the sharpest turnaround in value, with apartments in The Palm Jumeirah (+14%) and Downtown Dubai (+8.0%) outperforming apartments in general (-3.1%) since the pandemic began.
Furthermore, villas in Mohammed bin Rashid City (+19%), Dubai Hills (+18%), and the Palm Jumeirah (+17%) have accelerated ahead of the wider villa market, highlighting the disproportionate effect of positive market sentiment on luxury home values.
While the total transaction volume in October fell to Dh11.2 billion, it was still the busiest October ever for the market.
“Average transacted prices are up 21 percent so far this year but remain 20 percent below the pre-Global Financial Crisis peak. Dubai’s relative affordability compared to other global gateway cities has been instrumental in driving its popularity and it wouldn’t be in the interest of market stability for prices to race past 2008, or indeed 2014 peaks over such a short period of time,” Durrani said.