House prices in Dubai have jumped 21 percent this year, according to global property consultant Knight Frank.
The boost in the market is being fuelled by the country’s response to the Covid crisis, with non-resident, ultra-high net worth individuals flocking to the city to secure the most expensive property, said Faisal Durrani, partner – head of Middle East Research, Knight Frank.
He added that $10 million-plus home sales now account for 7 percent for all transactions in the emirate by value, compared to a long-term average of just 2 percent.
“Excellent governance has always been a defining feature of the United Arab Emirates. And the post-Covid bounce currently underway in Dubai’s real estate market, which is driving the emirate’s third property cycle, is a reminder of the authorities’ phenomenal response to the pandemic,” said Durrani.
According to Knight Frank, the most expensive areas in the city are experiencing the sharpest turnaround in values, with apartments in locations such as The Palm Jumeirah (+14 percent) and Downtown Dubai (+8 percent) outperforming apartments (-3.1 percent) in general, since the start of the pandemic.
Similarly, villas in Mohammed Bin Rashid City (+19 percent), Dubai Hills (+18 percent) and the Palm Jumeirah (+17 percent) have accelerated ahead of the wider villa market, highlighting the disproportionate impact of positive market sentiment on luxury home values.
The market has experienced its busiest overall September on record, with total home sales across Dubai crossing AED12.2 billion, double the previous September record of AED6.1bn set back during the heady days of the pre-global financial crisis (GFC) ‘gold rush’ in 2009.
“There are many reasons the UAE’s 50th birthday will be remembered and there are very early signs to suggest that 2021 may also end up marking the peak of Dubai’s third property cycle. While values are still creeping up, anecdotal evidence points to an emerging delta between seller and buyer expectations, a classic sign of a rising market that may soon stall. In fact, total transaction volumes in October declined to AED11.2bn, still marking the busiest ever October for the market, but a decline on the previous month, nonetheless,” said Durrani.
“Average transacted prices are up 21 percent so far this year but remain 20 percent below the pre-GFC peak. Dubai’s relative affordability compared to other global gateway cities has been instrumental in driving its popularity and it wouldn’t be in the interest of market stability for prices to race past the 2008, or indeed 2014 peaks, over such a short period of time,” he added.
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