According to a report by Betterhomes published on Tuesday, Dubai’s real estate sector is back in the spotlight as a hot market for buyers of high-end properties.
H1 2021 Dubai Real Estate Market Report of Dubai Real Estate Brokerage shows that the number of units sold increased by 70% compared to the same period in 2020, and by 52 percent compared to the same period in 2019. “With an overall positive economic and employment sentiment in Dubai, residents have been investing heavily in the property over the past six months.”
Richard Waind, group managing director, said in the first half of 2021, the Dubai property market saw transaction levels at their highest for over a decade. “Domestically, low-interest rates and improving job sentiment, coupled with a focus on the “home” brought on by the pandemic, have led to a surge in demand from residents.”
Internationally, Dubai’s Covid-19 response and business-friendly approach have won many admirers, said Waind. “As a result, investors have returned in large numbers, looking to take advantage of both improving capital growth prospects and attractive rental yields, which remain higher than most established markets.”
He said, prices will continue to rise for the next two years since the US Federal Reserve expects interest rates to remain at current low levels into 2022, and new unit supply will peak and decline from next year.
“However, with rental prices lagging sales prices in many places, we see investor margins are being squeezed, especially in periphery communities with lots of new apartment supply, so I expect we will continue to see some winners and some losers in terms of prices across the market,” said Waind.
The number of transactions and prices in villa communities surged in H1 2021. The number of villa transactions increased by 167 percent, while townhouse transactions increased by 97 percent.
The number of buyer leads for villas/townhouses increased by 123 percent at Betterhomes, and the number of villas/townhouses sold increased by 146 percent. There was a 26 percent increase in transactions for four-bed villas in this category.
According to Betterhomes data, the number of UK home buyers increased by 600 percent in H1 2021, rising from 10th place in H1 2020 to 2nd place in the company’s ranking of buyers by nationality.
Dubai Land Department data shows that prices increased by almost 40 percent in some communities, such as Jumeirah Islands, and decreased by over 25 percent in others, such as Al Habtoor City and Dubai South. H1 2021 saw an increase of 24 percent for villas/townhouses and 3 percent for apartments in average property prices per square foot.
As with sales in H1, tenant leads and rental transactions significantly increased compared to the previous year in Dubai’s residential leasing market. There were 31 percent more leasing transactions at Betterhomes than in H1 2020, and 47 percent more tenants registered.
“The desire for outside space and home offices has been a key driver for larger units. Three-bed apartments and villas were, particularly in high demand. Many villa communities experienced a sharp decline in rental supply this year as tenants competed to snap up available units, which in turn had pushed prices up,” said the report.
“Rising rental prices in villas and townhouses have not gone unnoticed by investors. Since they typically have lower service charges than apartments, investors went for smaller villas and two or three-bed townhouses with high rental demand and attractive yields. Rental prices of villas followed market trends and increased by 14 percent, primarily due to a decline in the inventory in certain communities,” said the report.