The real estate landscape in Dubai witnessed a notable uptick in residential property prices, surging by 4.8% in the second quarter, maintaining an unbroken trajectory of expansion for ten consecutive quarters. The surge in prices can be attributed to robust economic growth and a robust demand surge in the market.
Presently, the average price per square foot for apartments in the emirate has surged by a substantial 21% since January 2020, reaching an average of Dh1,290 ($351), while villa prices have soared by an impressive 51% over the same period, settling at an average of Dh1,520 per square foot. These figures, released by Knight Frank, underline the robust growth of Dubai’s property market.
Faisal Durrani, partner and head of research for Middle East and Africa at Knight Frank, emphasised, “The enduring streak of price growth shows no signs of abating. In fact, all market dynamics continue to align toward further escalation, particularly in the villa segment where supply-demand equilibrium remains off-kilter.”
This trend is notably pronounced in prime localities such as Jumeirah Bay Island, Emirates Hills, and Palm Jumeirah. The second quarter witnessed an 11.6% surge in villa prices, with an astonishing 125% growth since January 2020. Interestingly, these areas have merely eight villas under construction, further amplifying the demand-supply discrepancy.
While villa prices across the rest of the city remain robust and 5% above the 2014 peak, more affordable areas are also witnessing a surge in prices. Dubai Hills Estate, for instance, experienced a 24% growth in villa values in the last year alone, marking the fastest growth rate within the city.
The demand for luxury second homes, particularly from international buyers and domestic investors, has been a pivotal driver for this growth, contributing significantly to the positive trajectory. The Palm Jumeirah remains a standout performer, with an impressive 9% growth in villa prices in the second quarter alone, leading to a cumulative growth of 44% over the past year.
The dynamic villa market in Palm Jumeirah has witnessed a staggering 146% surge since January 2020, with prices reaching approximately Dh4,800 per square foot. In contrast, apartment prices lag behind their 2015 peak by 7%.
Property experts are optimistic about Dubai’s real estate sector, citing factors such as population growth, favourable tax policies, and a positive global economic climate as catalysts for the ongoing boom. The real estate market rebounded robustly from the pandemic-induced slowdown, buoyed by initiatives like residency permits for retirees and remote workers, as well as the extended golden visa program and gains from Expo 2020 Dubai.
In the first quarter of the year, Dubai’s economy expanded by 2.8%, continuing the strong growth momentum observed in 2022 when the emirate grew by 4.4%. The real estate sector contributed significantly, with a 2.4% growth and a 7.4% contribution to the economy, as per government data.
The trend of off-plan sales is also on the rise. Faisal Durrani notes, “As developers respond to stable and sustained demand for homes with a rise in product launches, the volume of off-plan homes sold has unsurprisingly been rising, now accounting for just over 50% of sales.”
While ready properties remain highly sought after, especially among international second-home buyers seeking the ‘Dubai lifestyle’, the demand for off-plan purchases stands at around 10% among global high-net-worth individuals.
Looking ahead, Knight Frank projects the delivery of 85,200 homes by the end of 2028, with 69% of them being apartments (59,000 units). This year alone, around 40,000 homes are expected to be completed, although some of these might be delayed to the following year.
Between 2024 and 2028, approximately 42,500 units are slated for completion, translating to an average of 8,500 homes annually. This represents a substantial 75% reduction compared to the long-term rate of home deliveries, implying sustained upward pressure on prices, especially as Dubai’s population continues to grow, recently crossing the 3.5 million mark.
Original article reference: The National News.
