Dubai residential market records highest quarterly price rise in a decade

Villa prices rise by 7.6% and apartment prices by 4.8% in the third quarter, according to ValuStrat

Residential asking rents in Dubai rose by 27.2 per cent in the third quarter, compared with the same period last year. Chris Whiteoak / The National

Dubai’s residential market recorded its highest quarterly price rise in a decade amid higher property demand in the emirate, a report by property consultancy ValuStrat has said.

The ValuStrat Price Index (VPI) covering Dubai’s residential market was up 6.1 per cent on a quarterly basis in the third quarter, with villa and apartment prices rising by 7.6 per cent and 4.8 per cent, respectively, during the period.

On an annual basis, the index increased by 15.1 per cent, with villa and apartment prices up 19.8 per cent and 11 per cent, respectively.

In the villa segment, The Palm Jumeirah, Jumeirah Islands, Dubai Hills Estate and Mudon recorded the highest capital gains during the quarter, while in the apartment category, Discovery Gardens, The Greens, The Palm and Dubailand Residence Complex were the best performers.

Prime properties also recorded capital gains in the third quarter. Prime property valuations rose by 16.5 per cent annually and 6.6 per cent on a quarterly basis, according to the report.

The VPI for prime villas reached a new 10-year high, with capital gains of 20.2 per cent year on year and 8.5 per cent quarterly.

Valuations of prime apartments rose 13.6 per cent annually and 5.2 per cent on a quarterly basis.

Dubai's property market has made a strong rebound from the coronavirus-induced slowdown, helped by government initiatives such as residency permits for retired and remote workers, and the expansion of the 10-year golden visa programme.

The economic gains generated by Expo 2020 Dubai and higher oil prices also supported the property market growth momentum.

Business activity in Dubai's non-oil private sector economy remained robust in September as sales growth hit its highest in more than four years amid improving demand.

The emirate's seasonally adjusted S&P Global purchasing managers' index reading rose to 56.1 in September, its strongest performance in three months, up from 55.0 in August.

Dubai’s economy expanded by an annual 3.2 per cent in the first half of 2023 to Dh223.8 billion ($60.9 billion), driven by the strong performance of the transport and storage sector, the latest government data shows.

The emirate recorded 11,308 ready or secondary home sales transactions during the third quarter, up 17.7 per cent compared with the same period last year, the ValuStrat data showed. This was equivalent to investments worth Dh26.4 billion.

The average ticket size of ready-to-move-in properties declined by 1.4 per cent annually to Dh2.3 million while 41.5 per cent of all ready home sales were priced less than Dh1 million.

There were 52 home sales worth more than Dh30 million during the three-month period, compared with 67 in the third quarter of last year, according to the report.

The citywide average transacted price for ready units during the third quarter was Dh14,077 a square metre (Dh1,308 per square foot), up 7.8 per cent annually.

Most transactions took place in Jumeirah Village, Dubai Marina, Business Bay, Downtown Dubai and International City.

The average ticket size for off-plan homes rose by 13 per cent annually to Dh2.5 million, with the citywide average transacted price for off-plan properties was at Dh20,035 a square metre.

“Mudon, Business Bay and Dubailand Residential Complex broke their individual monthly records for the first time with the highest number of off-plan properties traded during the third quarter,” the report said.

Off-plan Oqood, or contract, registrations rose 19.1 per cent annually, which equals Dh36.9 billion worth of investments.

Dubai residential rental values also jumped in the third quarter, according to the report.

Residential asking rents in the emirate rose 27.2 per cent in the third quarter when compared with the same period last year, with villa and apartment rents increasing by 38.7 per cent and 19.1 per cent on an annual basis.

Based on developer completion schedules, the number of new build units entering the market this year was estimated at 53,715 homes.

Total project completions in the first nine months of this year stood at 21,507 apartments and 2,068 villas, equivalent to 44 per cent of preliminary estimates for the whole of 2023.

During the third quarter, office sales transactions grew by 9 per cent, year on year, to 631. The median transacted price stood at Dh11,140 a square metre, up 28.4 per cent annually, according to the report.

In terms of sales volume, Business Bay retained its position as the most popular choice for office sales with a share of about 44.5 per cent, followed by Jumeirah Lakes Towers with 33 per cent of overall transactions.