Dubai: Property price increases in Dubai are starting to slow down – but that’s still after a 10.1 per cent increase during the April-June phase. So much so, the average selling price has shot up to around Dh1,100 a square foot against an average of Dh800-Dh900 psf 12 months ago.
Villa values are still in the red-hot category, 19.3 per cent higher than what they were at a year ago, with estate agents talking about no letup in demand for Dh40 million and more homes.
“On the Palm Jumeirah, villa prices have grown by 51 per cent in the last 12 months and by 68 per cent since the onset of the pandemic, highlighting the extreme depth of demand for the city’s premier homes,” said Faisal Durrani, Partner – Head of Middle East Research at Knight Frank. “Not to be outdone, prices for villas in District One and Dubai Hills Estate have also expanded by an impressive 30 per cent over the same period.”
Last year, the market recorded 93 ultra-prime sales, which was an all-time record.
Knight Frank expects overall Dubai home prices to end 2022 at 5-7 per cent higher than December last, while prime properties could experience a rise of 'closer to 15 per cent' over the same period.
At the Palm, expect more price increases, as demand supersedes available supply by quite a distance. Apart from the Palm, the same impact will be felt at Emirates Hills and Jumeirah Bay Island, as just eight new homes are expected to be completed between 2023 and 2025.
Durrani said: “The severity of the shortage of new supply, combined with insatiable international demand has driven prime residential prices up by an extraordinary 70.3 per cent in the last 12 months. The caveat to this stellar growth is that average transacted prices in these exclusive precincts stands at Dh2,900 psf (or $800), making Dubai one of the most ‘affordable’ luxury residential markets in the world.
“It is in fact four times cheaper than prime neighbourhoods in New York or London.
“Buyers and investors from locations across South America and Eastern Europe are joining the diverse mix of second-home buyers and investors from countries such as Monaco, Austria, Switzerland, India, Singapore, mainland China, the UK, the US and the GCC.”
Luxury homes close in on another record
Just over the halfway mark of the year, all signs point to another record sales of $10 million homes in Dubai. “We’ve had 82 ultra-prime deals during the first six-months of 2022 – homes priced at over $10 million,” said Durrani. “Last year, the market recorded 93 ultra-prime sales, which was an all-time record.
“At the time, it meant that 2021 had registered nearly 40 per cent of all ultra-prime home sales ever recorded in Dubai. 2022 looks set to eclipse this by some way.”
“We are noting a handful of instances where buyers are challenging vendors on pricing," said Andrew Cummings, Partner – Head of Prime Residential at Knight Frank. "This isn’t necessarily surprising given the magnitude of price increases in the market over the last two years.
"Still, we are only two-years into the current market cycle – previous cycles have lasted for almost 10 years – and a slowing in the rate of increases will help to sustain the market both from a demand and transactional perspective. It’s also a sign that our market is starting to mature and is in a very different place to previous cycles.”