Dubai's property market continues to set new records, prices continue to grow

Over the last twelve months, much of the activity has been focused on villas and townhouses.

Dubai's COVID-19 response and business-friendly environment continued to positively affect the real estate market in Q3 2021 that witnessed plenty of domestic and international demand. New investors and residents were and still are attracted in Dubai by swift vaccine rollout, visa reforms and 100% business ownership rules introduced in the emirate.

Over the last twelve months, much of the activity has been focused on villas and townhouses: those buyers who can afford larger properties with outside space opt for it. Prices for villas in prime communities have risen substantially. And as for apartment prices, though they lagged those of villas over the last year, many prime areas have had double-digit growth. Palm Jumeirah again led the way with a 26 percent rise.

However, there are signs that the pace of recent price rises is starting to slow as the supply and demand dynamic shifts in reaction to recent price increases. But that doesn’t signal that prices have reached their peak. According to the recent UBS Real Estate Bubble Report, Dubai is the best valued global real estate market in the world. And with a worldwide audience reinvigorated by Dubai at the moment, prices will most likely continue to rise for the foreseeable future, though at a slower rate than over the past year.

The Dubai property market continued to set new records in Q3: the Dubai Land Department (DLD) recorded 15,406 transactions during the period, 81 percent up from Q3 2020 and 48 percent up from Q3 2019. The summer defied the traditional view that it is a quieter time in the market, as plenty of activity was registered both in off-plan and secondary segments.

Total transactions number for the year to date is 74 percent higher than in the same period in 2020 and 51 percent higher than in the same period in 2019, before the pandemic. Total value of the property sold in Q3 increased by 128 percent year-on-year, reflecting price growth that has been experienced in many areas since the bottom of the market last summer.

Villa transactions grew by 105 percent against the same period last year. And the apartment sector also experienced growth, increasing by 96 percent in volume compared to Q3 2020.

Prices for villas in prime communities have seen substantial rises from their record lows last summer with Palm Jumeirah (55 percent), Jumeirah Islands (54 percent) and Emirates Living (52 percent) leading the way as buyers, predominantly end users, have sought purchases in well-established communities.

Apartment price rises have lagged those of villas over the last year, however, many prime areas have seen double-digit price growth, with Palm Jumeirah again leading the way (26 percent). Price rises in the apartment segment have been less uniform than in the villa segment. And such communities as Discovery Gardens, Dubai South, Silicon Oasis and International City have even seen prices decline over the last year by 2.45, 12.9, 8.05 and 5.67 percent, respectively.

While Q3 2020 was dominated by domestic end-user demand in the wake of lockdown, Q3 2021 the market has shifted towards investors, both local and international. Last year buyers who identified themselves as investors accounted for 51 percent, this year already for 62 percent.