Demand for villas driving Dubai’s real estate growth to seven-year high

Fueled by the UAE’s post-pandemic economic recovery, Dubai’s residential real estate market is experiencing a boom led by a demand for villas which are witnessing growth not seen since 2014, according to research by ValuStrat.

The second quarter of 2021 saw the valuation-based ValuStrat Price Index (VPI) for Dubai’s residential property market grow 3.8 percent when compared to the previous quarter. Villas fueled this growth with a quarterly rise of seven percent and an annual gain of 6.3 percent.

While the prime villa market remained stable at an average price of AED8.04 million ($2.2m) – about 1.65 percent lower than the previous quarter – sales volume for prime villas in Dubai have increased by over 48 percent from Q1, standing at AED5.9bn, as per analysis by Luxhabitat Sotheby’s based on data from Dubai Land Department.

“The post-Covid-19 resilience of UAE’s economy is attracting immense wealth from across the world and especially from Europe, England and Americas,” said Chris Whitehead, managing partner of Luxhabitat Sotheby’s International Realty.

“This exponential growth in high-net-worth end user buyers is here to stay and it will increase the demand for luxury sector properties through 2021 to next year,” he added.

Overall, Dubai’s prime residential market saw a 43.8 percent surge in sales volume in the second quarter of the year with 4,681 apartments and 818 villas sold worth AED16.7bn, Luxhabitat Sotheby indicated.

A strong surge in buyer activity has also resulted in a nominal 1.4 percent increase in prices, as per Luxhabitat Sotheby’s, with the Al Barari Residence area showing the highest growth of sales at AED333m (2.1 times higher than the previous quarter), followed by Jumeirah Golf Estates (1.9 increase in sales at AED734m) and Mohammed bin Rashid City (1.7 growth in sales at AED2.4bn).

Meanwhile, the highest annual capital gains measured by ValuStrat’s VPI were recorded in Arabian Ranches at 10.3 percent, Jumeirah Islands with 9.1 percent, Dubai Hills Estate at 9 percent, The Lakes with 8.2 percent, Mudon at 7.7 percent and The Meadows with 7.2 percent.

The rental market also witnessed a boost with spikes in asking rentals due to increased villa demand – listed rentals for the property type increased by 15.2 percent when compared to the same period last year, ValuStrat’s research indicated. Citywide residential asking rents remained stable overall when compared to last year and listed rents for apartments were down 7.8 percent.

Average annual rents for 2-bed villas stood at AED105,000, 3-beds at AED151,000, and 4-bedroom villas at AED 215,000. Meanwhile, average rents per annum for studio apartments were AED34,000, 1-bed at AED 51,000, 2-beds at AED 74,000, and 3-bedroom apartments were AED 113,000.

Apartments in the prime areas retained price levels at an average of AED1,439 per sqft but saw a 25 percent surge in sales volume, Luxhabitat Sotheby’s analysis revealed.

Quarterly, apartments’ VPI grew 1.7 percent but declined 4.8 percent when compared to last year. Jumeirah Beach Residence, Palm Jumeirah, Downtown Dubai, and the Views were the best quarterly performers.

Earlier research by Chestertons MENA also reflected this boom in Dubai’s property market driven by demand for villas where average villa prices rose 3.9 percent compared to the fourth quarter of 2020 and also surpassed their Q1 2020 level, rising 1.1 percent annually.

The high-end villa segment, defined as units priced at AED8m and above, saw particular growth, recording 207 sales collectively worth AED3.34bn compared to 85 units totalling AED1.20bn in Q1 2020, Chestertons said.

This article was originally published in Arabian Business