Dubai: Property prices rise for 11th consecutive quarter

The Dubai property market, which continued its upward march for the 11th consecutive quarter in Q3 2023, will see “substantial price growth” over the next five years as prices remain “very cheap” when compared to other major global cities as well as undersupply in the coming years, said analysts.

Property prices in Dubai are much cheaper than in Hong Kong, New York, Singapore, London, Paris, Tokyo, Sydney and many other top European and American cities. According to global real estate consultancy Knight Frank, $1 million can fetch 17 sqm of prime property in Monaco, 33sqm in New York, 34 sqm in Singapore and London, 44sqm in Sydney and Shanghai, 60sqm in Tokyo, 70sqm in Berlin and 105sqm in Dubai. This shows that prime real estate prices in Dubai are cheaper by more than 50 per cent when compared to major cities, hence, it will attract a large number of high-net-worth individuals, investors and end-users to the market.

“Currently, Dubai real estate remains very cheap compared to other global cities, and I believe that at the top end of the market, there will be substantial price growth over the next five years and beyond,” said Nick Candy, CEO of Candy Capital.

As per Knight Frank data, there are 77,864 homes (excluding branded residences) under construction in Dubai, which are scheduled for delivery by the end of 2028, with an annual average of approximately 13,000 homes over the next six years, considerably below historical completion rates.

“The city remains undersupplied, particularly given the population growth projections and the dearth of new homes in prime neighbourhoods as well as in the upper echelons of the price spectrum,” said Faisal Durrani, partner and head of research for Mena at Knight Frank.

He added that as the market approaches the fourth year of sustained price increases in this third market cycle, Dubai’s prime markets remain highly sought-after.

Between the first quarter and to third quarter of 2023, around 87,000 homes sold with a value of $10 million-plus were resold, resulting in a total transaction value of Dh224.6 billion. Comparatively, 2022 witnessed 92,000 transactions, with a cumulative value of Dh222.7 billion, Knight Frank said. However, monthly activity dipped to 7,500 transactions in September, down from the consistent pace of over 10,000 homes sold per month between January and August.

11th consecutive quarterly rise

Knight Frank said residential property values in Dubai continued their upward trajectory in the third quarter of 2023, marking the 11th consecutive quarter of price increases.

During the third quarter of 2023, average residential property prices rose by 5 per cent, bringing the cumulative increase to 30 per cent since Q1 2020, although prices remain 7 per cent below the peak of 2014. On an annual basis, prices showed a significant rise of 19 per cent.

“These latest price growth highlights the unwavering confidence in Dubai’s luxury real estate market. The city’s remarkable trajectory, world-class lifestyle, and strategic position as a global city have solidified Dubai’s status as a magnet for the world’s elite,” Candy said.

Apartment prices in Dubai rose 5.1 per cent to over Dh1,300 per sqft, signifying a robust 26 per cent increase since Q1 2020, although it is noteworthy that despite a significant 19 per cent increase in the past year, apartment prices remain 10 per cent below the 2014 peak.

In the villa segment, prices in Dubai experienced a 4.5 per cent increase between June and September, culminating in an average price of Dh1,580 per sqft. This reflected an 18 per cent surge as compared to the previous year and a 57 per cent increase since Q1 2020.

• Business