European buyers relocating families to Dubai spur realty rebound

European buyers, mostly end-users relocating their families to the relative safety of Dubai, have been driving a significant rebound in the emirate’s property sector as prices hit an eight-year high, recording a 10 per cent year-on-year jump in June.

A report by Property Monitor, a leading property portal, said European buyers emerged as “a key demographic recently, driving sales with most being end users.”

“Based on our conversations with brokers and industry experts, the motivation here is the relocation of entire families from Europe as opposed to the sole breadwinner living in Dubai. As further evidence of this trend, several schools have reported an uptick in enrolments of new residents,” said the report.

“What we’re seeing here is an evolution… where people are buying homes to live in after renting for a few years, then going on to sell those homes and upgrade to larger properties, creating a mature property cycle,” Lewis Allsopp, CEO of Allsopp & Allsopp, the estate agency, said.

In June, Dubai’s resilient property market maintained its resounding recovery, with a 2.1 per cent price spike, the eighth successive monthly surge as transaction numbers recorded their best performance since December 2013 with 6,389 deals recorded, said the portal.

Median prices in June were Dh928,848 for apartments, Dh1.7 million for townhouses and Dh3.4 million for villas.

“On a monthly basis, prices spiked 2.1 per cent and now stand at Dh924 per sq ft. They were last seen at these levels two years ago. Since bottoming out in November 2020, property prices have risen by 12.7 per cent,” said the report.

“The recovery still remains uneven between communities with the strongest price increases seen in the market for villas and traditionally sought-after communities. However, we expect the recovery to balance out over the rest of 2021 and switch to a more tenable pace across Dubai,” said the report.

According to Dubai Land Department data, the Dubai property market recorded Dh68 billion worth of deals) in the first 53 days of the year. For the full year, the projections are for Dh300 billion plus.

Demand continues to remain robust for properties at the top end of the market with transactions for properties valued over Dh10 million registering yet another strong month.

In all, 111 transactions were recorded for this segment in June, slightly lower than the 117 in May, but still indicative of a buoyant market.

On a monthly basis, sales jumped 43.7 per cent and climbed a massive 174 per cent from last June when buyers were first taking notice of attractive real estate deals amid easing movement restrictions.

“A block of delayed registrations in June for previous months was recorded from Azizi Developments, including off-plan and initial sales from the developer. While this was a notable contributor to the rise in sales volumes this month, even without these deals, June recorded one of its best performances for transactions since at least 2009,” said the report.

A total of 2,419 off-plan transactions were registered in June, up 43.3 per cent on a monthly basis. Completed properties took 62.1% market share in June 2021 versus 37.9 per cent for off-plan, continuing a year-long trend as new launches stalled, and buyers demonstrated a preference for ready-to-move properties.

However, completed property transactions may start to give up some of these market share gains as new project launches gather pace. Meanwhile, initial sales transactions—the first sale of a property from the developer for an off plan or completed project—jumped 51.2 per cent monthly to stand at 3,800 in June.

Mortgages for villas and townhouses increased month-on-month while loans for apartments declined, reflecting buyer preferences. Overall, at 2,135, new loans for June fell by 9.4 per cent over the previous month, driven by a decline in bulk mortgages, which are primarily taken out for apartment buildings. 

This article was originally published in Khaleej Times.