Dubai realty bets on sustainable recovery | SP Investment

Price appreciation will continue in 2022 but at a slower pace as appetite for Dubai properties grows

Dubai property prices will sustain an upward trend next year after posting strong recovery in 2021 despite a challenging environment worldwide in the wake of the Covid-19 pandemic, experts say.

Industry specialists and executives said Dubai real estate market sustained a price appreciation since November last year due to strong demand from the end-users and investors across the globe.

Referring to latest report released by ValuStrat, they said the citywide residential value price index (VPI) improved 12.6 percent year-on-year basis as it witnessed accelerated monthly growth from 0.7 percent in January to 1.8 per cent in October.

“The recovery continued in both villas and apartments this year as prices in few villa areas soared as high as 30 percent when compared to October last year. Most of the apartment submarket also continued to improve, albeit at a slower pace,” according to the ValuStrat report.

Last week, the Dubai Land Department (DLD) said the year-to-date total sales reached 48,651 valuing Dh177.44 billion, reflecting a 38.34 percent year-on-year growth in terms of transactions and 63.4 percent in terms of value during the first 10 months of 2021. The emirate recorded best October in past eight years as investors poured Dh13.12 billion in the property sector through 5,352 deals.

Strong double-digit growth seen

Haider Tuaima, head of Real Estate Research at ValuStrat, said residential market is expected to grow at 15 percent this year.

“Villas will lead recovery in real estate market with strong 25 percent increase in prices this year while apartments are likely to grow at five percent. Some villa locations are expected to grow above 30 percent due to strong demand from end-users and investors,” Tuima told Khaleej Times.

In reply to a question, he said this positive momentum will continue in post Expo period next year as well.

“Yes, the momentum is expected to stay in positive territory but at a slower rate. This is because of pending supply due next year,” he said.

“The villa segment that saw an exceptional growth this year may have reached their saturation ceiling, therefore it would either stabilise or see marginal improvement by the end of 2022,” he added.

Capital values surge

The ValuStrat report indicated that all 13 villa locations and all 21 apartment areas monitored by the VPI have seen their capital values either stabilise or improve when compared to the previous month.

For villas, the highest annual capital gains continued in older gated communities such as Arabian Ranches (31 percent), Jumeirah Islands (30.9 percent), The Lakes (27.9 percent) and The Meadows (26.7 percent).

For VPI monitored apartments, top annual performers in terms of double-digit capital gains were found within established beachfront communities in Palm Jumeirah (14.6 percent), and Jumeirah Beach Residence (12.1 percent). However, some areas such as Jumeirah Village apartments (-6.3 percent), Dubai Sports City (-2.8 percent), and Dubai Production City (-2.6 percent) saw negative annual performance.

Expo 2020 a major catalyst

Ata Shobeiry, chief executive at Zoom Property, said the positive trend in the market is certainly welcoming, particularly for property developers and investors.

“With the third quarter witnessing a substantial growth in apartment and villa prices, the trend is expected to continue in the fourth quarter and beyond.

In reply to a question, he said Expo 2020 is a major catalyst to drive boom in the real estate market.

“If we look back at the past world fairs, most host nations witnessed a significant increase in the real estate sector post the event. We can expect the same for Dubai, even more because Dubai is following a more sustainable approach as the Expo 2020 site will be converted into District 2020, a mixed-use community,” Shobeiry told Khaleej Times.

Big ticket deals

“October saw 19 transactions valued over Dh30 million and such transactions were concentrated in Dubai Hills Estate, Downtown Dubai, Business Bay, District One, Jumeirah Golf Estates, Emirates Hills, and Palm Jumeirah,” according to the ValuStrat report.

The report further said that properties developed by established players were in more demand as buyers preferred Emaar (30.2 percent), Nakeel (5.4 percent) and Dubai Properties (4.3 percent) over other developers.

“The Valley (14.9 percent), Business Bay (12.7 percent), Dubai Harbour (8.2 percent) and Arabian Ranches phase 3 (6.3 percent) were top off-plan locations transacted in October 2021 while most transacted ready homes were located in Dubai Marina (8.1 percent), Business Bay (7.9 percent), Jumeirah Village (7.5 percent), Akoya Oxygen (seven percent), and Jumeirah Lake Towers (4.7 percent),” according to the ValuStrat report.

Source