Property Market in Dubai and Best Sales

As stated in the Dubai Land Department bulletin dated May, 2021, the beginning of the year (January – April 2021) outperformed during the same period compared to the previous year by 51%. In nominal terms, the entire sector resulted in 25,455 transactions estimated at an impressive AED 92 billion (USD 25,05 billion) of capital.

Within the first four months of the year the share of new customers entering the market grew by 65% and totaled 8,749. An increase on a yearly basis amounted to 54%. Basically, the buyers in the market are domestic ones, UAE-nationals and residents have acquired housing as their primary home and taken advantage of the relatively low property prices to get a step up on the property ladder (ValuStrat data). As per the representative of CORE Research & Advisory, around 81% of total transactions were made through mortgage financing within the first half of 2021.

While domestic end-users obtain properties within the medium price bracket, the prime residential market witnesses an inflow of foreign buyers, who can easily afford their 3rd or 4th home for millions of dirhams. They mainly reside in large villas and or penthouses. From January 2021 until the beginning of May, 81 villas were sold in Palm Jumeirah alone.

For the aforementioned period total investments in properties had reached AED 36 billion (USD 9.8 billion), displaying an increase of 44% in comparison with the same period in 2020. A healthy rate of growth since January 2021 is an encouraging sign and an additional reason for strengthening investors’ trust within the region.

The uptrend successfully continued in May, booming with 4,429 deals worth AED 11.11 billion (USD 3 billion). Essentially, this will be the next record-breaking month, which has displayed the best results year on year since 2017. A monthly increase in overall sales value is estimated at 1.4%.

In May 2021 77% of all sales transactions were for apartments, while 23% were for villas. The majority of residential sales were completed in the secondary market (62%) and 38% were sold from off-plan deals. To a large extent the results of May were a repeat of the market performance in April: 60% - secondary properties, 40% - from the developer.

As stated before, since the start of the coronavirus pandemic the prices for residential properties have been generally declining across the emirate, particularly for apartments. Growth is suppressed by a combination of factors, including an imbalance between supply and demand, where new affordable housing has prevailed. Still, due to growing interest in certain types of housing, namely ready-to-occupy units, asking prices in some communities have moved upwards to at least single digits by June 2021.

Prices Rising

According to the Property Monitor data, the most notable increase in property asking prices in May 2021 was registered in villa communities. The upward change varied between 0.86% and 5.65%:

Pricing for apartments in some of neighbourhoods across Dubai grew at a more moderate rate and only increased to a maximum of 3.86%.

Prices Falling

In places where villas and townhouses are located, there were not so many registered declines compared to the apartment sector. Pricing for the Arabian Ranches 2 homes decreased by 2.27% and resulted in AED 903 (USD 246) for the average cost per sq. ft. Dubai Investment Park and Dubai South Townhouses saw an insignificant decline of 0.4%.

Apartments in a series of communities became a bit more affordable as of May 2021. Price deviation ranged from 0.06% to 4.93%. To give an example, residences in Dubai South were cheaper by 4.93% and averaged at AED 608 (USD 166) per sq. ft. Prices for Discovery Gardens units fell by 2.41% and in Business Bay decreased to 1,17%.

Residential Rentals

Rentals for villas rose by 4.7%, while apartment rents fell by 10.3% in the period to April 2021. This market is especially sensitive to migration, job losses and huge departures of thousands of workers have inevitably affected the prices for leasehold. Rents are suppressed generally, although there is a moderate increase in certain neighbourhoods. Landlords have to cater to the needs of tenants, so at the moment it would be detrimental to increase the price of rentals, instead it would be much more beneficial to offer incentives including payment by 12 cheques (in contrast to yearly or quarterly installments) or receive payments via credit card etc. As per the Executives of Asteco, this trend will continue throughout the coming year.

Rents Falling

The most significant declines in rental rates during the period from January to May 2021 were registered in Al Jaddaf, Bluewaters Island, Trade Centre, The Greens, Barsha Heights and Jumeirah Lake Towers (JLT), according to the research group CBRE Middle East. In May 2021 a maximum decrease of the average villa rental was seen in Falconcity of Wonders with a 6.9% downturn. Insignificant declines by about 1% took place in Dubai Silicon Oasis and Dubai South Townhouses.

In summary, apartment leaseholds have become more affordable compared to detached housing (villas and townhouses) since the beginning of the year. Quite a number of apartment communities across Dubai witnessed rental prices fall from 0.2% - 5.84% in May 2021. Homes to rent in Al Khail Heights were offered 5.84% less than in April, followed by Dubai Festival City with a 5.02% decrease and Discovery Gardens 3.04% less. Other areas, like International City, Al Habtoor City, Dubai Studio City and Motor City experienced an insignificant decline in rental prices.

Rents Grow

Rental costs grew in almost every villa community across Dubai from January through to May 2021. The highest growth was registered in Hills Estate and Wasl Gate. Due to the strong demand for spacious villas in waterfront and well-established communities, in areas such as Palm Jumeirah, Emirates Hills, The Springs, The Meadows and Arabian Ranches which all experienced a sustained increase.

In May the most notable improvement in rents amounted to 6.2% for the Victory Heights villas, followed by Emirates Living – by 3.77%, Jumeirah Golf Estates – 3.04% and Mohammed bin Rashid City Townhouses – 2.86%.

New Launches from The Developers

Despite the complicated economic conditions and an uptrend for new housing supply reduction, some of the leading national developers still launched new residential projects, which turned out to be extremely successful amongst buyers. In the first five months of 2021 Emaar sold properties for AED 10.5 billion (USD 2,86 billion) with a 250% increase compared to the same period in 2020.

May 2021 was particularly rich in newly launched releases, just to name a few:

Industry executives mention that recent sales transactions of both medium off-plan and high-end completed homes were finalized at record speed – within days.

Dubai is always about luxury, fast cars and top-dollar properties. The latter are consistently in high demand among high-profile customers from all over the world. Even with state borders closed and international flights interrupted, Dubai’s prime residential market is booming with high-price sales.

From January until May this year, the most noticeable upmarket sales transactions include: