DUBAI 16 August 2021: 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 in the latest Observer: UAE Q2 2021 Market Report by international real estate services firm, Chestertons, showed total residential transaction value in Dubai increased by almost 50 per cent Quarter-on-Quarter (Q-o-Q) to Dh31.02 billion, up from Dh20.77 billion the previous quarter. Total residential transaction value reached its highest level since Q4 2013, when residential sales totalled Dh31.67 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.
“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, said Chris Hobden, Head of Strategic Consultancy, Chestertons Mena. “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 Dh885 per sqft, up from Dh830 per sqft in Q1 2021. The Lakes followed closely behind with a 6.5% increase to Dh1,065 per sqft from Dh1,000 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 Dh1,085 per sqft, up from Dh1,030 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 Dh765 and Dh860 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 Dh590 per sqft, followed by Discovery Gardens, at 2.6%, to Dh483 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.