Dubai property price rise reflects healthy demand

The property market in Dubai is increasingly displaying signs of healthy demand and stabilisation with price increases recorded consistently over the past four months, providing further evidence that the market bottomed out in late 2020.

For the three months ending February, prices increased 4.6 per cent, according to Property Monitor. The price recovery gained further momentum in February, with monthly gains of 1.9 per cent recorded at an emirate-wide level after recording gains of 1.3 per cent in January and 1.5 per cent in December, and now stand at Dh858 per square foot — back to levels last recorded in July 2012.

“The declines seen month-by-month in 2020 have almost been erased by the recent strong performance, with overall prices decreasing by just over one per cent in the year to February,” Property Monitor said in its monthly market report.

“This figure represents a very significant turnaround compared to the prior year period to February 2020, when a year-on-year decrease of 11.4 per cent was recorded,” Zhann Jochinke, COO of Property Monitor, said.

“Based on current trends and reports from brokers of strong demand, Property Monitor predicts that the market will show further growth into the year as the world starts to exit the pandemic and international travel links are restored,” Jochinke added.

“Winners and losers will likely emerge based on the desirability of the location and community. The question will then be whether the current price growth is sustainable if supply is again triggered with new developments and off-plan sales recovery.”

Brokers report strong demand, especially in the popular locations, with a further acceleration in prices now likely as the world exits the pandemic.

The median apartment price sits at Dh775,000, townhouses at Dh1.539 million and villas at Dh3.333 million.

Arabian Ranches, Damac Hills, Jumeirah Islands, Mudon and The Villa have all reported largely consistent monthly price appreciation over the past three to six months.

For the ninth straight month, sales of completed properties dominated off-plan, said the report. Completed property transactions accounted for 68.4 per cent of sales in February versus only 31.6 per cent for off-plan properties.

“The pandemic and ensuing need for space seems to have triggered a sense of urgency among buyers and investors to secure ready properties that offer immediate possession in favourable locations, before prices appreciate further,” said the report.

After setting a record-breaking volume of over 3,000 mortgages in January — where nearly 50 per cent of mortgages occurred on a single day and are believed to have been the result of a bulk portfolio of loans — mortgage transactions returned to expected levels in February with 1,465 loans recorded. Of these, just under 70 per cent were bulk mortgage transactions spread across several projects.

In February, the Dh3 million-Dh5 million price tier witnessed a marked increase in popularity, rising to 12 per cent from 7.7 per cent in January. This rise can largely be attributed to the launch of the Harmony Villas in Tilal Al Ghaf, which accounted for 25 per cent of all transactions in this tier.

Resale transactions — subsequent sales of a property once purchased from the developer — stood at 49.9 per cent of the total market in February, well above the 12-month average of 34.9 per cent. This steady strengthening of the resale market is a telling sign of a maturing market where end-user and investment demand drives activity rather than speculation.

This article was originally published in Khaleej Times