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Buoyancy returns to Dubai realty

Dubai - Transactions during March were at a 10-year high as strong market growth continued, Property Monitor monthly market report said

The Dubai property market continued to strengthen in Q1 2021 to record the first yearly price increases since 2015 while displaying new and promising markers for growth each month.

In March, with a rise of 1.3 per cent to Dh873 per sqft, realty prices have recorded the first year-on-year increase since February 2015 while confirming the strong reversal of the downward trend of recent years, according to Property Monitor.

Transactions during March were at a 10-year high as strong market growth continued, Property Monitor monthly market report said.

“The last time rates were at this level was in October-November 2012 during the previous cycle, prices went on to rise for a further two years. The latest reading marks a considerable sea-change in market sentiment and performance compared to March 2020 when a year-on-year decrease of 9.8 per cent was recorded,” said the report.

“With a fifth continuous month of gains, Dubai’s price recovery is well underway though not uniformly spread across communities. Villa and townhouse communities have particularly emerged as hot spots with a further acceleration in prices expected over the coming months. Newer communities have joined the established locations as the preferred options for buyers with many also opting for turnkey houses in the absence of finding homes where they can renovate as per their requirement. Further, the encouraging data on transactions is a strong and reliable sign of a buoyant market and contradicts concerns about oversupply and a shrinking population impacting real estate demand,” said Zhann Jochinke, chief operating officer, Property Monitor.

PNC Menon, chairman of Sobha Realty Group, said the buoyancy in the property market is “a testament to Dubai’s economic resilience and its ever growing attraction as a global residential destination of the rich and famous people. The worst is behind us as Dubai property has started steadily regaining investors’ trust.”

John Lyons, managing director, Espace, said his company had a record-breaking quarter where it sold 63 per cent more properties than the year ago period, with a 115 per cent increase in our revenue.

“The percentage increase in value terms was greater than volume terms, because we transacted at much higher values than in previous years. For example, in Q1 2020, only 7.0 per cent of our transactions were above the Dh5 million mortgage cap threshold but in Q1 2021, 30 per cent of our transactions were above this threshold,” he said.

“There is an unquestionable resurgence in Dubai’s luxury residential market, with a significant increase in equity, specifically flowing into high value villas in prime locations. We have sold a significant number of properties above Dh20 million,” said Lyons.

In value terms, a record sale for villa N100 on Palm Jumeirah was registered at Dh111.25 million on 8 March 2021. In 2015, Villa D106, spread over three plots on the D Frond on Palm Jumeirah, had been sold for Dh185 million.

Another trend witnessed during the first quarter was a pickup in demand for off-plan properties. However, on a market share basis, demand for off-plan is heavily outweighed by completed properties. Title deed transactions accounted for 63.2 per cent of all transactions in March.

“However, at 1,691 transactions, March marks the strongest month on a volume basis for the off-plan segment since September 2020 when 1,778 transactions were recorded. With new launches now gradually resuming, it remains to be seen if and when the scales will tip in favour of off-plan deals again,” said the report.

In March, the high-end price tiers, comprising properties above million, saw a collective increase in demand of 2.4 per cent month-on-month, securing their highest market share for high-end sales since 2016. Particularly the Dh10 million plus price tier surged 66.7 per cent month-on-month and reached a historic high of 2.5 per cent of total market share.

— issacjohn@khaleejtimes.com