Dubai: Rents in Dubai may be showing signs of some sort of levelling off, but the same is definitely not happening on property sales values for now. The average value on residential deals have seen a 17 per cent rise in the last 12 months, with the April-June period alone packing in a near 5 per cent gain, according to the consultancy Knight Frank.
And if it’s a luxury home that an investor is planning to buy now, he or she would have to reckon with an eye-watering 125 per cent increase in asking prices that Dubai’s poshest neighborhoods have seen since January 2020.
If any of these prospective buyers are hoping to see signs of a cooling off, they are not getting it. “As things stand, the relatively long-run of price growth is showing no signs of slowing,” said Faisal Durrani, Head of Research for Middle East and Africa at Knight Frank. “If anything, all the market dynamics continue to point toward further increases, particularly when it comes to villas as the supply-demand dynamic remains out of kilter.”
For instance, at Jumeirah Bay Island, Emirates Hills and Palm Jumeirah, villa prices were up 11.6 per cent in Q2-23 and an ‘extraordinary 125 per cent’ since January 2020. “What’s more, just 8 villas are currently under construction in these neighbourhoods,” said Durrani.
Which should divert buyer attention to other upscale locations in Dubai, with Dubai Hills continuing to garner a lot of the attention. So is Majid Al Futtaim backed ‘island’ developments at Tilal Al Ghaf. A new possibility will emerge through Emaar’s brand new ‘The Oasis’ community.
Villas at Dubai Hills Estate registered 24 per cent growth in value in the last 12-months, which is the fastest in the city.
Palm sails on
Sustained demand for luxury second homes, particularly from international buyers, keeps the Palm Jumeirah deal flows ticking along. It remains the city’s star-performing villa market, with prices growing 9 per cent in Q2-23 alone and 44 per cent over the past 12 months.
On the Palm Jumeirah, villa prices have risen 146 per cent since January 2020, hovering around Dh4,800 per square foot. Villa prices are 67 per cent higher than during the 2017 peak, while Palm’s apartments ‘still lag their last peak in 2015 by 7 per cent’.
When’s Palm Jebel Ali entering the fray?
The property market keeps waiting for the big relaunch of the second Dubai Palm island. Broker sources say that some of their high networth investors are waiting for that launch, especially those wanting to take the first shot at buying up some of the prime locations. Of particular interest would be the pricing on the initial launches at the new Palm and how these compare with those on the Palm Jumeirah.
Keep building more homes
Across Dubai, 42,500 units are likely to see completion between 2024-28, which represent an 'average of just 8,500 homes per year – a 75 per cent reduction on the long-term rate of home deliveries', said Shehzad Jamal, Partner – Head of Strategy & Consultancy, Middle East & Africa at Knight Frank.
This hints at 'continued upward pressure on prices, particularly as the population continues to swell, recently surpassing 3.5 million residents," Jamal added. "This is of course a static view that may change should there be more project announcements.”
Around 40,000 new homes look likely to be completed this year.