‘Year of the Fiftieth’ sees Dubai house prices jump 21%| MENAFN.COM

Tuesday, 25 January 2022 10:58 GMT

‘Year of the Fiftieth’ sees Dubai house prices jump 21%


(MENAFN- Knight Frank Middle East ) 29th November, Dubai: Dubai’s property market has experienced a phenomenal turnaround in the United Arab Emirates’ ‘Year of the Fiftieth’, according to analysis carried out by global property consultant, Knight Frank.
Faisal Durrani, Partner – Head of Middle East Research, Knight Frank said: “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.
“Yes, buyer habits have evolved over the course of the last 18-months, but the feel-good sentiment injected into the market by the way in which infection rates have been arrested in the UAE has played an incredibly strong part in driving villa prices up by 14% since January 2020.”
By contrast, in the 18-months since the Global Financial Crisis hit, house prices in the emirate retreated by close to 32%. In this cycle, however, Knight Frank highlights that the recovery in values has not been uniform.
New type of buyer
Durrani added, “The buoyancy in market sentiment has rippled outward from the emirate and caught the attention of a new flavour of buyer: non-resident, ultra-high net worth individuals, who for the first time are flocking to the city to secure our most expensive property. USD 10 million plus home sales now account for 7% for all transactions in the city by value, compared to a long-term average of just 2%.
These buyers, who are from locations such as Monaco, Switzerland and China, are driving an even sharper rebound at the top of the market. Developers are responding, pushing the envelope and bringing to market AED 10,000 psf square foot homes, such as Alpago’s Palm Flower project. More modestly priced properties continue to languish, however. Indeed, residential values overall are still some 29% below the 2014 peak.”
Knight Frank notes that the most expensive areas in the city are experiencing the sharpest turnaround in values, with apartments in locations such as The Palm Jumeirah (+14%) and Downtown Dubai (+8%) outperforming apartments (-3.1%) in general, since the start of the pandemic.
Similarly, 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 impact of positive market sentiment on luxury home values.
While the first market cycle was cut short by the GFC, it was fuelled by exuberance to a large extent, rather than solid market fundamentals. This time however, the picture is more complex, says Knight Frank.
The third cycle
The market has experienced its busiest overall September on record, with total home sales across Dubai crossing AED 12.2bn, double the previous September record of AED 6.1bn set back during the heady days of the pre-GFC ‘gold rush’ in 2009.
“There are many reasons the UAE’s 50th birthday will be remembered and there are very early signs to suggest that 2021 may also end up marking the peak of Dubai’s third property cycle. While values are still creeping up, anecdotal evidence points to an emerging delta between seller and buyer expectations, a classic sign of a rising market that may soon stall. In fact, total transaction volumes in October declined to AED 11.2 bn, still marking the busiest ever October for the market, but a decline on the previous month, nonetheless.
“Average transacted prices are up 21% so far this year but remain 20% below the pre-GFC 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 the 2008, or indeed 2014 peaks over such a short period of time”, Durrani concluded.

MENAFN29112021004907011333ID1103269196


Knight Frank Middle East

Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.