Property Prices in Dubai’s Prime Markets to Grow 5% Next Year, Knight Frank Says
Property values in the emirate witnessed a notable 19% annual increase in the third quarter.
A recent report suggests that Dubai’s high-end residential market is poised for significant expansion, primarily driven by limitations in supply and a resurgence in demand from key source markets like China and India.
Knight Frank’s report indicates an expected 5% rise in property prices in Dubai’s prime areas, including The Palm Jumeirah, Emirates Hills, and Jumeirah Bay Island, for the upcoming year, while other residential segments are projected to grow at 3.5%.
During the third quarter of this year, average residential property prices across Dubai increased by 19% annually and by 5% compared to the previous quarter, resulting in a cumulative increase of 30% since the first quarter of 2020.
Apartment prices saw a 19% annual increase in the third quarter, with villa prices rising by 18%.
Over the first nine months of this year, average residential prices displayed an annual growth of 15.6%.
Faisal Durrani, Partner and Head of Research for Mena, noted that Dubai’s prime property markets continue to be highly sought after, contributing to 4.8% of the total transaction value in the first nine months of 2023.
Dubai saw 116,116 new property transactions valued at about Dh429.6 billion ($117 billion) in the first nine months of 2023, based on the latest data from the Dubai Land Department.
The data reveals a remarkable 33.8% annual increase in total transactions, with values rising by over 36.7% during the same period.
The Dubai property market rebounded significantly from the slowdown induced by the coronavirus, thanks to government initiatives like residency permits for retirees and remote workers, as well as the expansion of the 10-year golden visa program.
The emirate’s residential market experienced its most significant quarterly price hike in a decade during the third quarter, fueled by heightened property demand in Dubai, according to a report from property consultancy ValuStrat.
Faisal Durrani observed that the market for ready-to-move homes continues to dominate, with 51% of transactions occurring between the first and third quarters being secondary market sales, indicating a high proportion of end-users and second-home buyers.
During the first nine months of this year, off-plan sales reached Dh100 billion, while sales of ready homes for the same period amounted to Dh104.9 billion, as reported by Knight Frank.
Notably, apartments in Dubai South exhibited one of the most substantial growth rates, with prices increasing by 73% annually in the third quarter, according to the report.
Jumeirah Lakes Towers closely followed with a 67% increase, as did Umm Suqeim Third, also known as Madinat Jumeirah Living, with a 37% increase.
Jumeirah Islands reported a 65% annual increase in villa prices in the third quarter, reaching Dh2,680 per square foot, establishing itself as the neighborhood with the most rapid increase in villa values, as per the report’s findings.
Additionally, Dubai South’s villas displayed the most significant quarterly price change, soaring by 33% in the third quarter.
Faisal Durrani pointed out that while their forecasts are optimistic, they are not without risk. Factors such as a global economic slowdown, potential regional tensions, and their impact on the local economy pose medium to high risks. An escalation in regional tensions could particularly lead to higher oil prices, potentially contributing to global inflation and increased interest rates, which, in turn, might result in higher borrowing costs and reduced demand.
Currently, there are 77,864 homes (excluding branded residences) under construction, scheduled for delivery by the end of 2028, with an annual average of around 13,000 homes over the next six years, a figure notably lower than historical completion rates.
Despite concerns about oversupply, Faisal Durrani emphasized that this presents a lower risk to the market. From their perspective, the city remains undersupplied, especially given population growth projections and the lack of new homes in prime neighborhoods and in the higher price brackets.
Publish Date: November 07, 2023
Source: https://www.thenationalnews.com/business/property/2023/11/07/property-prices-in-dubais-prime-markets-to-grow-5-next-year-knight-frank-says/
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