Dubai’s prime house values jump 59% in 12 months

House prices in Dubai grew by 10.6 per cent in 2021 and rose by a further 2.6 per cent during the first three months of 2022, according to Knight Frank’s analysis.

Prices of prime residential properties in Dubai recorded an almost 60 per cent jump over the past 12 months, underscoring the rebound of the property market boom triggered by the return of investors and international buyers.

House prices in Dubai grew by 10.6 per cent in 2021 and rose by a further 2.6 per cent during the first three months of 2022, according to Knight Frank’s analysis.

The latest increase leaves values 11.3 per cent higher than Q1 2021; the highest rate of annual growth since January 2015.

However, according to an analysis by Luxhabitat Sotheby, based on data from the Dubai Land Department, luxury property prices in Dubai slipped by six per cent in the first quarter of 2022, with an average price of prime property at Dh4.5 million. As per the data, Dubai’s prime residential market saw a minimal surge in volume in Q1 2022 of 1.03 per cent at Dh17.28 billion compared to the previous quarter.

During 2021 overall, Dubai’s residential market recorded over 52,000 apartment and villa transactions, totalling Dh 114.2 billion, more than the total for 2019 and 2020 combined.

Faisal Durrani, partner and head of Middle East Research of Knight Frank, said the positive market sentiment, driven by the government’s world-leading response to the pandemic, coupled with the successful hosting of the World Expo, the reopening of travel corridors and Dubai’s global safe-haven status continues to underpin the market’s rebound.

“Despite the sharp turnaround in prices, values are still, on average, about 25 per cent below their 2014 peak, but villas are now just 12.9 per cent below the last market high in 2014,” Durrani said.

According to another real estate brokerage Union Square House, from 2021 to date, luxury residences by all major developers in Dubai have been fully sold out, and now trading at a premium on the secondary market.

With the pandemic coming to an end, more and more people, especially millionaires, are moving to Dubai with their families and investing in holiday homes and permanent residences. According to New World Wealth, Dubai’s population of high-net-worth individuals soared to 54,000 HNWIs in June 2021 from 52,000 in December 2020, achieving a growth of 3.8 per cent.

Gaurav Aidasani, founder and managing director of Union Square House, said the influx of millionaires that Dubai is witnessing has been boosting the luxury property market. Investors today still seek high returns on their investments. “However, the main reason behind their investments now is to own a super-prime home in Dubai. This has created a market shift in the luxury property category, turning the tables and causing investor demand to outstrip market supply.”

Knight Frank data also points to a growing disparity in buyer and seller expectations; a trend identified in the second half of 2021.

“This trend is persisting in some segments of the market, which is starting to have the overall effect of causing average price increases to slow, just as Knight Frank previously forecast. Overall villa prices grew by 3.2 per cent during Q1, down from 3.4 per cent in the final three months of 2021, marking the slowest quarterly increase in over two years,” the real estate consultancy said.

“The Palm Jumeirah and Emirates Hills continue to cement their iconic status, with global buyers continuing to jostle for an address in Dubai’s most exclusive enclaves. Villa prices on the Palm Jumeirah have increased by 38.6 per cent in the last 12 months, for instance. In addition, there were a record breaking 93 ultra-Prime home sales in 2021 – these are homes priced at over $10 million. During Q1, we’ve recorded another 32 ultra-Prime deals, exceeding the second best annual total set in 2015.”

Maintaining the high momentum from the preceding year, Zoom Property CEO Ata Shobeiry said the Dubai property market continues to perform exceptionally well in 2022, with residential values recording a substantial increase in prime areas.

"This clearly signifies that it's the best time to invest in Dubai real estate since the prices are expected to further rise in the near future. It will, however, take some time to reach the 2014 peak levels, but the positive market sentiment makes it suitable for investors," he said.

Data reveals that the Palm Jumeirah, registered villa price growth of 10.9 per cent during Q1 alone, with the priciest villa ever sold in Dubai transacting on the iconic island during March for a record Dh280 million. Similarly, in the exclusive Emirates Hills, the rate of annual villa price growth stood at almost 20 per cent at the end of Q1, with the period between January and March registering a rise of 6.5 per cent.

Knight Frank forecasts another 100,000 units will enter the market by the end of 2025, with over 50,000 homes due to be completed during the remainder of 2022. Just 25 per cent of the homes expected by 2025 are forecast to be villas.

—issacjohn@khaleejtimes.com

• Dubai