Dubai’s Property Market Buoyed By International Interest As Residential Transactions Reach 7 Year High In Q2 2021
According to the latest research by leading international real estate services firm, Chestertons, Dubai witnessed a notable rise in residential transactions over the second quarter of 2021, with positive market sentiment and continued international buyer interest driving sales.
The findings, revealed in the latest Observer: UAE Q2 2021 Market Report, showed that total residential transaction value in Dubai increased by almost 50% Quarter-on-Quarter (Q-o-Q) to AED 31.02 billion, up from AED 20.77 billion the previous quarter. Total residential transaction value reached its highest level since Q4 2013, when residential sales totalled AED 31.67 billion. Residential transaction volume totalled 14,426 units, a rise of 35.48% from Q1 2021.
Completed property sales accounted for 71% of total transaction value and 59% of volume in Q2 2021, with off-plan sales yet to approach their pre-pandemic share.
Chris Hobden, Head of Strategic Consultancy, Chestertons MENA, said: “With residential transactions at near-record levels, increased international interest has been a key factor, with Dubai’s handling of Covid-19 supporting post-lockdown demand from buyers drawn by visa reforms, the emirate’s quality of life and comparatively attractive pricing.
“We have seen a clear improvement in market sentiment among UAE residents this year, with a desire to buy ahead of anticipated price rises, coupled with favourable mortgage rates and generous developer incentives, spurring sales.”
In Dubai’s villa sales sector, strong end-user demand and continued international buyer interest underpinned prices in Q2 2021. As a result, average villa prices increased by 5.7% Q-o-Q, supporting a 9.1% rise Y-o-Y.
The Meadows/The Springs saw the highest quarterly increases at 6.6% with average prices reaching AED 885 per sqft, up from AED 830 per sqft in Q1 2021. The Lakes followed closely behind with a 6.5% increase to AED 1,065 per sqft from AED 1,000 the previous quarter. Jumeirah Park saw prices rise by 5.4%, while Palm Jumeirah and Arabian Ranches saw 4.9% increases Q-o-Q.
On an annual basis, Palm Jumeirah was the only location to see a double-digit rise, with average prices increasing by 12.4% Y-o-Y. The Lakes and The Meadows/The Springs also saw notable gains at 8.7% and 8.6%, respectively.
Meanwhile, apartment prices in Dubai saw a modest increase, with average values rising by 0.8% Q-o-Q, although performance varied by location and prices remained 3.7% below their Q2 2020 level.
The Views recorded the highest quarterly price rise, at 5.3%, with prices averaging AED 1,085 per sqft, up from AED 1,030 the previous quarter. Downtown Dubai prices also increased by 4.5% Q-o-Q. Both Jumeirah Lake Towers (JLT) and The Greens saw quarterly price rises of 3%, reaching AED 765 and AED 860 per sqft, respectively.
Dubai Marina, Motor City, Business Bay and International City achieved more moderate quarterly price hikes of 2.2%, 1.8%, 1.5% and 0.7%, respectively. All other locations recorded quarterly declines of between 1.0% to 5.1%. Dubailand saw the sharpest quarterly fall, at 5.1% to AED 590 per sqft, followed by Discovery Gardens, at 2.6%, to AED 483 per sqft.
Annually, Downtown Dubai, The Views, The Greens, and Business Bay saw prices rise by 4.4%, 3.3%, 2.9% and 0.3%, respectively with all other locations experiencing price declines of 0.2% to 12.4 Y-o-Y.
In Dubai’s villa rental market, average rents rose by 2.6% Q-o-Q, a modest increase in the 2.3% growth witnessed in Q1. Annually, villa rents surpassed their Q2 2020 average, rising by 3.5% Y-o-Y.
“The rise in villa rents was principally driven by continued tenant demand for more open space and outside areas, with agents reporting a sustained increase in villa enquiries since the easing of social distancing restrictions last year,” Hobden said.
“With work-from-home policies continuing across the private sector, even if on a part-time basis, we expect villa rents to outperform the wider residential average over the months ahead,” he added.
Palm Jumeirah saw the highest increase in villa rents, at 3.9% Q-o-Q, followed by Jumeirah Golf Estates, Victory Heights and The Lakes, which recorded increases of 3.4%, 3.1% and 3%, respectively. All other locations saw quarterly increases between 1.6% to 2.3%.
Meanwhile, average apartment rents in Dubai recorded modest declines over Q2, with a continued tenant preference for villas, coupled with long-standing oversupply, placing downward pressure across secondary locations. Apartment rents fell by 0.5% on average and remained 8.7% below their Q2 2020 level.
However, Downtown Dubai recorded a slight increase in average rents, at 1.7% Q-o-Q, followed by Dubai Marina at 1.5% and JLT at 1.1%. DIFC saw the highest quarterly decline, at 3.4%, followed by Discovery Gardens at 2.8%. Both Dubai Silicon Oasis and Dubailand recorded 2.5% declines Q-o-Q.
“While we expect apartment rents to face continued pressure medium-term, improvements in employment levels noted over Q2, along with continued take-up of the UAE’s remote-working visa, should serve to support demand,” Hobden concluded.
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