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Dubai residential sector short and long term sentiment high, as real estate property index rises

Dubai's property market shows every indication it's rebounding, spurred on by rising sales and company shares

April continued the ongoing growth trend where residential sales volumes rose 16.9% over March The rally in Dubai’s residential property prices isn’t stopping anytime soon Dubai’s benchmark stock index advanced the most among Gulf peers

According to Valustrat Price Index (VPI), there are promising signals that the Dubai property market has indeed bottomed out. Clear improvements in capital values were observed in 96% of locations monitored by the VPI. 

Annually, the valuation-based index was 6.5% lower than the previous year. April continued the ongoing growth trend where residential sales volumes rose 16.9% over March. Off-plan and ready homes monthly sales increased 30.1% and 8.7% respectively. 

Freehold locations monitored by the VPI saw capital values expand monthly by 1.1% on average, villas as well as apartments. Improvements in apartment capital values were observed in Jumeirah Beach Residence, Palm Jumeirah, and Jumeirah Lake Towers with an average monthly growth of 1.5%. Villa freehold locations registered monthly increases that averaged a higher rate of 2.1%. 

A record 3% monthly gain was seen in Jumeirah Islands. Sales of existing ready-to-move-in homes in April 2021 exceeded the whole second quarter of 2020, a time when lockdown measures were put in place due to the COVID-19 pandemic. 

Some 42.8% of home transactions were off-plan. Villas in Dubai Hills Estate and Palm Jumeirah registered their highest ever individual monthly sales volumes. 

Properties developed by Emaar, Nakheel, Damac, Dubai Properties, MAG Property Development, topped the sales charts overall. Top off-plan locations transacted during April were in Dubai Harbor, Mohammed Bin Rashid City – District Seven, Jumeirah Lake Towers, Jumeirah Village, and Arjan. Most transacted ready homes were located in Dubai Marina, Jumeirah Village, Dubai Sports City, Palm Jumeirah, and Town Square.

The ValuStrat Price Index for Dubai’s office capital values is a valuation-based index constructed to represent the quarterly price change experienced by typical office space within Dubai. 

The ValuStrat Price Index for Dubai’s residential capital values is a valuation-based index constructed to represent the monthly price change experienced by typical residential units within Dubai.

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Read: Allsopp & Allsopp real estate Q1 report 2021

Long time property rally

The rally in Dubai’s residential property prices isn’t stopping anytime soon, according to Morgan Stanley.

“Robust demand, peaking supply growth, and long lead times for new projects could lead to a tighter-than-expected market over the next several years,” analysts Katherine Carpenter and Nida Iqbal wrote in a report.

Business activity in Dubai has risen to the highest level since late 2019 because of a rebound in tourism and fast distribution of coronavirus vaccines.  

For properties worth at least 10 million dirhams ($2.7 mn), a record 84 changed hands in March, according to data from real estate consultant Property Monitor.

Buying real estate is one of the fastest ways of getting a residency permit in Dubai. 

Emaar Properties PJSC, the biggest listed developer in the emirate, posted a 65% jump in villas sales in the first quarter from the year-ago period.

Demand picked up amid “a wave of government reforms over the past 12 months, attractive mortgage rates, and a shift in demand patterns due to Covid-19,” according to Morgan Stanley.

Property shares on the rise 

Dubai’s benchmark stock index advanced the most among Gulf peers as real estate shares extended gains.

The Dubai Financial Market General Index rose as much as 1.7% in 5 consecutive days in late May, its longest winning streak since March. The sub-index tracking Dubai-based real estate shares climbed as much as 2.7% on May 23, reaching the highest level since November 2019.  

Meanwhile, gauges in Abu Dhabi, Kuwait, and Egypt notched gains while those in Saudi Arabia and Bahrain were little changed. Qatari and Omani shares declined.