Dubai property prices on the rise as residents 'buy to stay' in UAE

Total number of homes planned or under construction now stands at 308,099 units

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With 853 homes sold, Palm Jumeirah once again accounted for the lion’s share of prime deals in H1 2024. — File photo

Published: Wed 11 Sep 2024, 4:31 PM

Last updated: Wed 11 Sep 2024, 10:20 PM

Dubai’s residential market continued to record strong growth in the second quarter of 2024, with property values rising by 21.3 per cent over the past year amid tightening supply as the ‘buy-to-stay’ trend grows, according to a global property consultant.

Average residential price increased by 21.3 per cent over the last 12 months with villas outperforming apartments.

Villa sale prices have grown by 24.3 per cent over the last 12 months, reaching Dh1,896 psf, putting them 28 per cent above the 2014 peak.

Knight Frank said in its Q2 Dubai Residential Market Review that this growth illustrates the enduring appeal of stand-alone, beachfront homes and branded residences that offer almost instant access to the Dubai lifestyle. Knight Frank’s 2024 Destination Dubai showed that access to greenery, wellness centres, and waterfront locations are the top factors attracting international buyers.

According to Knight Frank, Dubai’s luxury residential sector has also witnessed strong growth. The Palm Jumeirah, Jumeirah Bay Island, Jumeirah Islands, and Emirates Hills, collectively known as ‘Prime Dubai’, saw a 7.0 per cent increase in average transacted prices, which stood at Dh3,706 psf at the end of H1 2024.

With 853 homes sold, Palm Jumeirah once again accounted for the lion’s share of prime deals in H1 2024, at 89.3 Petri Mannila, partner – head of Prime Residential, UAE added.

It was followed by Jumeirah Islands (5.03 per cent) and Jumeirah Bay Island (3.56 per cent), and Emirates Hills (1.05 per cent).

Faisal Durrani, partner – head of Research, Mena, said the trajectory of home values in Dubai remains unchanged, highlighting the enduring demand from domestic and international buyers for homes in the city.

“The change in buyers’ preference — from purely investment-driven to those looking to purchase for personal reasons — is eroding the number of listings in the city, which is also contributing to the sustained price rises which have continued for 21 quarters,’ said Durrani.

The number of residential listings in Q2 2024 fell by 22.8 per cent compared to the previous year, and for the first time since Q1 2022, the number of unique home listings in a single quarter has fallen below 100,000.

“The decrease in luxury home supply was even more pronounced, highlights Knight Frank. The number of homes available for sale in Dubai’s four prime residential communities of the Palm Jumeirah, Emirates Hills, Jumeirah Bay Island, and Jumeirah Islands has fallen by 47 per cent over the last 12 months to 2,851 properties,” Durrani said.

“The fall in the number of homes available for sale in the city reflects the increasing ‘buy-to-stay’ and ‘buy-to-hold’ mentality among purchasers. Buyers are increasingly purchasing these properties to use as their primary home or for use as a holiday home or second home. This significant shift in the mentality of buyers reflects the growing maturity of the market, which will further broaden its appeal to even more buyers and investors,” Petri Mannila, partner – head of Prime Residential, UAE added.

Knight Frank has updated its total pipeline of residential units scheduled for completion by 2029. The total number of homes planned or under construction now stands at 308,099 units. Of these, 82 per cent will be apartments, with the remainder being villas. This translates into an average of approximately 51,350 homes per year for the next six years, higher than the long-term completion rate of around 30,000 homes per year. The figure still falls short of the 73,000 homes per year Knight Frank estimates is needed for the next 16 years to accommodate Dubai’s vision of a population of 7.8 million by 2040, especially when factoring for the 30-40 per cent completion delays in any given year.