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Dubai’s property sector recorded its largest single-month price increase since March 2014 in April, increasing for the sixth consecutive month by 2.5 per cent as investors returned with confidence, buoyed by recent capital gains, a new market study said on Wednesday.
Reasons for the buoyancy also include “an extremely low-interest rate environment and mortgage availability that continued to drive healthy domestic end-user activity.”
Prices are now higher than a year ago and the strong recovery shows little sign of abating. Since the end of 2020, prices have steadily recovered to record gains of 9.5 per cent in the last six months, Property Monitor said in its monthly market report.
The median price of an apartment in March was Dh850,000, townhouse at Dh1.535 million, and villa at Dh 2.728 million. In April, sales transactions of properties over Dh10 million hit another record month with 90 transactions, up 6.7 per cent from March. A total of 81 villa transactions above Dh10 million were recorded on the Palm Jumeirah alone this year versus 54 in all of 2020, said the report.
“However, this strong performance is not uniform across all communities, with some areas still displaying price weakness. Given this uneven performance, the strong double-digit increases recorded in certain communities are likely to slow in momentum as the recovery switches to a more sustainable pace across Dubai as a whole,” said the report.
Presently, average property prices are at Dh895 per square feet. The last time rates were at this level (in November-December 2012), prices went on to rise for a further two years.
“The extreme low-interest rate environment and mortgage availability continues to drive healthy domestic end-user activity, and investors are returning with confidence, buoyed by recent capital gains. Villa sellers are increasingly understanding the market power they hold and we have seen a rapid increase in asking prices as they look to recoup previous year’s losses. Prices remain well below past peaks and offer great value, but the lack of available stock is impacting transaction volumes. It seems Europe has woken up again to how much Dubai has to offer, and high net worth (HNW) Europeans are coming to the market in numbers we have not seen before,” said Richard Waind group managing director Betterhomes.
“The lifestyle, safety and business friendly environment are key pull factors, and we think the post-Covid tax bill in many countries will act as a key push factor. These are buyers looking at Dubai as a long-term base and have been fuelling the over Dh10 million market with waterfront villas in particularly high demand,” said Waind.
At 4,879, transaction volumes in April recorded a month-on-month increase of just over 6.0 per cent and a year-on-year increase of 167.4 per cent. It is important to take into account the low base figure of April 2020 when movement restrictions were in place, impacting transaction volumes. Yet, April 2021 transactions represent the highest number of transactions this year and the highest since November 2019 when 5,009 sales were recorded, said the report.
With new launches now gradually resuming and developers keen to introduce more projects, it remains to be seen if and when consumer demand for off-plan properties will return strongly and overtake demand for ready properties.
Meanwhile, initial sales transactions — the occurrence of the first sale of a property from the developer for an off-plan or completed project — stood at 2,777 in April, up 12.9 per cent compared to the previous month and a strong 67.7 per cent year-on-year.
This article was originally published in Khaleej Times.
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