Dubai house prices jump 21% as property market continues to recover

Ultra-high-net-worth individuals buy some of the most expensive properties in the emirate

Apartments in The Palm Jumeirah and Downtown Dubai are outperforming other locations in the emirate in terms of values. Paulo Vecina / The National

Residential property prices in Dubai jumped 21 per cent in the first 10 months of the year as the emirate’s property sector continues to recover from the coronavirus pandemic on the back of an accelerated vaccination programme and other government measures.

The average house price climbed to Dh1,235 per square foot ($336.28) in October from Dh1,021 per square foot recorded in January, according to a report from global consultancy Knight Frank.

“The buoyancy in market sentiment has rippled outward from the emirate and caught the attention of a new flavour of the buyer, non-resident, ultra-high-net-worth individuals, who for the first time, are flocking to the city to secure our most expensive property,” said Faisal Durrani, partner and head of Middle East research at Knight Frank.

“[The] $10 million-plus home sales now account for 7 per cent for all transactions in the city by value, compared to a long-term average of just 2 per cent.”

The UAE property market, which softened due to a three-year oil price slump that began in 2014 over supply concerns and the pandemic, is on a rebound as people upgrade to larger homes with outdoor amenities amid a surge in remote working and online learning.

Economic support measures and government initiatives – such as residency permits for those who have retired and remote workers in addition to the expansion of the 10-year golden visa programme – have also helped to improve sentiment.

The buyers are from different locations including Monaco, Switzerland and China, Mr Durrani, said.

“Developers are responding, pushing the envelope and bringing to market Dh10,000 per-square-foot homes, such as Alpago’s Palm Flower project. More modestly priced properties continue to languish, however.”

Alpago’s Palm Flower project at The Palm will feature one residential unit per floor and is being designed by the British firm Foster + Partners, the developer said earlier this month.

However, residential values are still about 29 per cent below peak levels in 2014.

Villa prices, meanwhile, surged 14 per cent since the start of the pandemic in January last year, as people moved to larger homes amid online schooling and the work-from-home culture, according to Knight Frank.

The most expensive areas in the city are recording the sharpest turnaround in values, with apartments in locations such as The Palm Jumeirah and Downtown Dubai outperforming apartments in general since the start of the pandemic.

Similarly, villa prices in Mohammed Bin Rashid City, Dubai Hills and The Palm Jumeirah have also jumped ahead of the wider villa market, “highlighting the disproportionate impact of positive market sentiment on luxury home values”, the report said.

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Home sales in September crossed Dh12.2bn, which was 100 per cent higher than the previous record of Dh6.1bn recorded for the same month in 2009. Total sales fell to Dh11.2bn in October.

“Dubai’s relative affordability, compared to other global gateway cities, has been instrumental in driving its popularity and it wouldn’t be in the interest of market stability for prices to race past 2008, or indeed 2014 peaks, over such a short period of time,” Mr Durrani said.

Meanwhile, apartment and villa sales prices in Dubai and Abu Dhabi jumped in the third quarter amid a broader recovery in the property market, property consultancy Asteco said on Monday.

Apartment sales prices in Dubai surged 14 per cent year-on-year in the three-month period, while villa prices rose 37 per cent during the period.

Asteco said it expected the momentum of growth to continue towards the end of the year and into 2022, albeit at a lower rate, a trend underpinned by anticipated developments stemming from the successful execution of the Expo 2020.

“Government initiatives in terms of new visa programmes and regulations to attract foreign investment, the easing of Covid-19 restrictions and the successful rollout of the vaccines are expected to boost the economy,” it said.

Villa rentals in Dubai rose 19 per cent annually, while apartment rents climbed 3 per cent.

In Abu Dhabi, villa prices jumped 14 per cent in the three months to the end of September, while apartments posted a modest increase of 1 per cent. Villa rents in the UAE capital, meanwhile, remained flat during the period, while apartment rents dropped 2 per cent, according to Asteco.