DUBAI: The value of residential transactions increased by nearly 50 percent during the Q2 2021 compared to the previous quarter as positive market sentiment and continued international buyer interest drove sales, according to Chestertons, an international real estate services firm.
The total residential value recorded was AED31.02 billion ($8.4 billion), up from AED20.77 billion the previous quarter, reaching its highest level since Q4 2013, when residential sales totaled AED 31.67 billion.
Residential transaction volume totaled 14,426 units, a rise of 35.48 percent from Q1 2021, the report said.
Completed property sales accounted for 71 percent of total transaction value and 59 percent of volume in the second quarter, with off-plan sales yet to approach their pre-pandemic share.
Chris Hobden, Head of Strategic Consultancy, Chestertons MENA, said increased international interest has been a key factor in driving residential transactions to near-record levels.
He said Dubai’s handling of Covid-19 pandemic has supported the post-lockdown demand from buyers who are drawn by visa reforms, the emirate’s quality of life and comparatively attractive pricing.
“We have seen a clear improvement in market sentiment among UAE residents this year, with a desire to buy ahead of anticipated price rises, coupled with favorable mortgage rates and generous developer incentives, spurring sales,” he said.
The Chesterons report said strong end-user demand and continued international buyer interest underpinned prices in the Dubai villa sector in the second quarter, which pushed villa prices up by 5.7 percent Q-o-Q, supporting a 9.1 percent rise Y-o-Y.
The Meadows/The Springs saw the highest quarterly increases at 6.6 percent with average prices reaching AED 885 per sqft, up from AED 830 per sqft in Q1 2021.
The Lakes followed closely behind with a 6.5 percent increase to AED1,065 per sqft from AED 1,000 the previous quarter. Jumeirah Park saw prices rise by 5.4 percent, while Q-o-Q rise in Palm Jumeirah and Arabian Ranches was 4.9 percent.
On an annual basis, Palm Jumeirah was the only location to see a double-digit rise, with average prices increasing by 12.4 percent Y-o-Y. The Lakes and The Meadows/The Springs also saw notable gains at 8.7 percent and 8.6 percent, respectively.
Apartment prices in Dubai, however, saw a modest increase, with average values rising by 0.8 percent Q-o-Q, although performance varied by location and prices remained 3.7 percent below their Q2 2020 level.
The Views recorded the highest quarterly price rise, at 5.3 percent with prices averaging AED1,085 per sqft, up from AED 1,030 the previous quarter. Downtown Dubai prices also increased by 4.5 percent Q-o-Q.
Both Jumeirah Lake Towers (JLT) and The Greens saw quarterly price rises of 3 percent reaching AED 765 and AED 860 per sqft, respectively, the report said.
Dubai Marina, Motor City, Business Bay and International City achieved more moderate quarterly price hikes of 2.2 percent, 1.8 percent, 1.5 percent and 0.7 percent, respectively. All other locations recorded quarterly declines of between 1.0 percent to 5.1 percent. Dubailand saw the sharpest quarterly fall, at 5.1percent to AED 590 per sqft, followed by Discovery Gardens, at 2.6percent, to AED 483 per sqft.
Annually, Downtown Dubai, The Views, The Greens, and Business Bay saw prices rise by 4.4 percent, 3.3 percent, 2.9 percent and 0.3 percent, respectively with all other locations experiencing price declines of 0.2percent to 12.4 Y-o-Y.
In Dubai’s villa rental market, average rents rose by 2.6 percent Q-o-Q, a modest increase in the 2.3 percent growth witnessed in Q1. Annually, villa rents surpassed their Q2 2020 average, rising by 3.5 percent Y-o-Y.
“The rise in villa rents was principally driven by continued tenant demand for more open space and outside areas, with agents reporting a sustained increase in villa enquiries since the easing of social distancing restrictions last year,” Hobden said.
“With work-from-home policies continuing across the private sector, even if on a part-time basis, we expect villa rents to outperform the wider residential average over the months ahead,” he added.
Palm Jumeirah saw the highest increase in villa rents, at 3.9 percent Q-o-Q, followed by Jumeirah Golf Estates, Victory Heights and The Lakes, which recorded increases of 3.4 percent, 3.1 percent and 3 percent, respectively. All other locations saw quarterly increases between 1.6 percent to 2.3 percent.
Average apartment rents in Dubai recorded modest declines over Q2, with a continued tenant preference for villas, coupled with long-standing oversupply, placing downward pressure across secondary locations. Apartment rents fell by 0.5 percent on average and remained 8.7 percent below their Q2 2020 level.
However, Downtown Dubai recorded a slight increase in average rents, at 1.7 percent Q-o-Q, followed by Dubai Marina at 1.5 percent and JLT at 1.1 percent. DIFC saw the highest quarterly decline, at 3.4 percent, followed by Discovery Gardens at 2.8 percent. Both Dubai Silicon Oasis and Dubailand recorded 2.5 percent declines Q-o-Q.
“While we expect apartment rents to face continued pressure medium-term, improvements in employment levels noted over Q2, along with continued take-up of the UAE’s remote-working visa, should serve to support demand,” said Hobden.