Dubai’s real estate market crawled out of a funk in the first quarter of 2021, with buyer’s sentiment boosted by falling prices and the rollout of Covid-19 vaccines, according to a recently released report by ValuStrat, a Dubai-based international consulting firm.
During the first three months, the ValuStrat Price Index for residential properties in Dubai was up 0.8% on a quarterly basis, the first time the index had a positive reading since 2014, according to ValuStrat.
“A positive trend commenced in the second half of 2019, only cut short by the Covid-19 restrictions last year,” Haider Tuaima, head of real estate research at ValuStrat, said in the report. “That trend has intensified with improved investor confidence, boosting demand, with a record number of title deeds registered and a gradual growth towards previous peaks.”
Villas fared better than apartments in the first quarter, as they saw quarterly price growth ranging from 1.8% to 5.4%, depending on the neighborhood, while only half of the apartment locations improving in value quarter over quarter, according to the report.
Villa sale prices increased by 3.5% and 2% in Dubai and Abu Dhabi, respectively, when compared to the same period last year, at real estate consultancy Colliers said in their latest report. Best performing neighborhoods included International City, Arabian Ranches, The Meadows, The Lakes, and Palm Jumeirah.
Good times coming
UAE-based real estate property agency Betterhomes said in a recently-released Residential Property Market Report for Q1 2021that the “worst is over” for Dubai’s property market, owing to a rise in prices since last summer.
The positive trends include a 12% jump in the number of units transacted and a 19% increase in the total value transacted in the residential market, according to the Dubai Land Department.
Commenting on the report, Richard Waind, Group Managing Director at Betterhomes, said: “We have seen a large number of Europeans who came to the UAE to escape lockdown, take advantage of or relaxations in visa rules and extend their stays, with many now looking to buy holiday homes or become residents themselves. The number of transactions record by British, Italian, French, and German buyers increased by 168% since Q1 2020, with luxury villas and apartments on the Palm and other coastal areas being in particularly high demand.”
In terms of residential sales, there was an 18% price increase for villa communities in Dubai, and a 167% increase in the number of registered buyers for villas and townhouses, while the number of actual transactions increased by 72%.
As per the report, four-bedroom villa sales doubled over Q1 2020, followed by five-bedroom villas with an increase of 83%. Secondary market sales made up 66% of the market in Q1 2021, the report stated.
Investors look for higher prices
As the property prices recover in Dubai, investors are holding back the sale of their assets to bargain for a better price. They said signs of recovery in the real estate sector are underway and the newly announced regulatory measures, local availability of the vaccine, and the upcoming Expo 2020 festivities will help further revive the sector during this financial year (FY).
“During the first quarter (Q1) of FY 2021, it has become apparent that due to the consistently high numbers of buyers in the market, we have seen a transition into a seller’s market. Many homeowners are holding out for a ‘better price’,” analysts at real estate consultancy Colliers said in their latest report.
“This inflated owner expectation accompanied with a supposed shortage of supply is causing prices to spike in a relatively short period of time,” the analysts added in their Q1 report.
Real estate consultancy JLL said lower sales prices have yielded a 15% increase in sales volume for Dubai in Q1 2021, as compared to the corresponding period last year.
Delivery on residential units
This year, Dubai is expected to deliver 46,316 apartments and 10,563 villas/townhouses. Approximately 7,294 units finished construction during the first quarter, equivalent to more than 12% of the total expected supply, according to the ValuStrat report. Dubai’s residential market stock increased to 607,000 units after adding 10,000 units in Q1 2021, JLL said.
In Abu Dhabi, around 200 residential units were delivered, bringing the total stock to roughly 265,300 units. By the end of FY 2021, approximately 11,700 units are scheduled to enter the market, according to JLL.