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Dubai residential property market recovery despite Eid slowdown

H1, 2021 reflects a V-shaped recovery for Dubai's residential property sector. What areas of the real estate sectors flourished in that period?

Dubai’s residential property market has seen a 74% increase in the overall volume of transactions in H1 Off-plan sales prices of villas have grown by 9.3% July saw sales transaction volumes 41.7% less than June, mainly due to the week-long Eid holidays

SmartCrowd, the DFSA-regulated property investment and technology platform, unveiled the results of its inaugural Dubai Residential Property Report for H1, 2021.

The most important findings indicate that Dubai’s property market appeared to ‘bottom out’ in November 2020 and that H1, 2021 reflects a V-shaped recovery for the Emirate’s residential property sector.

Dubai’s residential property market has seen a 74% increase in the overall volume of transactions in H1 2021 compared to H1 2020, while the value of property transactions has increased by 113% in the same period.

Speaking about the rebound of the property market, CEO and co-founder of SmartCrowd, Siddiq Farid said: “Government policies to introduce attractive visa and residency schemes for investors and professionals are starting to bear fruit. Incentives to support entrepreneurs and the private sector, proactive safety measures to combat Covid-19, and visionary thinking for events such as EXPO 2020, have underpinned investor appetite for real estate in Dubai.”

Ready properties commanded the most attention from investors with 72% of overall deals in completed homes, against 28% off-plan. Demand for ready stock also helped drive per square foot prices for available properties up by 10%.

Conversely, the average off-plan price per square foot took a dip by 3.42% compared to H1 2020, but this can be attributed to new supply focusing on affordable housing segments and thus putting downward pressure on average pricing.

The report also looked more closely at specific areas and segments in Dubai. Palm Jumeirah has shown a 34% uptick in the value of property transactions and a 221% increase in the volume of transactions, while JLT saw the highest increase in transaction volume of 262%.

Dubai’s villa segment has posted some of the strongest sales performance. The sales average for ready villas in Dubai has increased by over 19.3% from 758.4 dirhams per square foot in H1 2020 to 905.1 dirhams per square foot in H1 2021.

Similarly, off-plan sales prices of villas have grown by 9.3% from 684.8 dirhams per square foot in H1 2020 to 748.4 dirhams per square foot in H1 2021. For apartments, ready sales prices have increased by 8.7% year-on-year, while off-plan apartment prices have dropped on average 9.5% compared to the same period last year.

“While investing in an entire property in Dubai might still be out of reach for some, investment via crowdfunding allows people to take a fraction of a property from as little as 2,000 dirhams. Crowdfunding in real estate is an accelerating trend and has the potential to be a major catalyst for the region’s property market,” Farid said.

Read the SmartCrowd H1 Dubai Residential Property report here.

Eid slowdown and top performers

The overall residential VPI as of July 2021 saw accelerated monthly growth of 1.8% to 70.3 points.

Villas representing 13% of Dubai’s residential market by transaction volume, led the VPI progress with a month-on-month increase of 3.1%, while apartments increased by a marginal 0.8% only.

The VPI, which is a valuation-based index, is currently 29.7% below its base of January 2014, and 42.6% below the peak witnessed mid-2014.

The month of July saw sales transaction volumes 41.7% less than June, mainly due to the week-long Eid holidays.

The month-on-month performance saw ready sales fall 50% and off-plan Oqood (contract) registrations down 30%.

For the first time in six years, all 13 villa locations and all 21 apartment areas monitored by the VPI have either seen their capital values stabilize or improve when compared to the previous month.

However, when compared to last year, villa prices have increased, mostly in double digits, but only a third of apartment areas saw improvements.

The highest annual capital gains were found in Arabian Ranches (16%), Jumeirah Islands (15%), Dubai Hills Estate (14.3%), and The Meadows (12.7%).

As far as the apartments are concerned, which represent 87% of Dubai’s residential market, the top annual performers in terms of capital gains were in Jumeirah Beach Residence (3.4%), Palm Jumeirah (3%), Al Furjan (2.5%) and Al Quoz Fourth – Al Khail Heights (2%).

Topping the sales charts overall were properties developed by Emaar (20.4%), Sobha (8.6%), Nakheel (6.5%), Seven Tides (5.4%), and Damac (4.9%).

Top off-plan locations transacted in July were in Dubai Harbour (19%), Sobha Hartland (16%), Jumeirah Lake Towers (10.3%), Jumeirah Village (9.5%), and Meydan One (7.4%).

Most transacted ready homes were located in Business Bay (12%), Dubai Marina (11%), Jumeirah Village (7.6%), Palm Jumeirah (5.6%), Jumeirah Lake Towers (5.5%), International City (4.9%), and Downtown Dubai (4%).