Dubai Property Sales Transactions Hit 11-Year High in Q1

• May 4th, 2021

As per a market report by ValuStrat, a real estate consultant, the highest recorded number of home sales transactions in Dubai in the Q1 of the year 2021 since the year 2010.

“Dubai registered sales of more than 6,000 ready homes worth Dh13.5 billion ($3.7bn) and 3,600 off-plan properties worth Dh5bn in the first three months of the year.”

As per the same source, the number of ready home sales rose 76.1 % on an annual basis, whereas the off-plan sales fell 30.2 %. If compared to the last quarter, ready sales of homes increased 17.4 % and off-plan sales were 8.9 % higher. In addition to this, Haider Tuaima, head of real estate research at ValuStrat stated,

“General market sentiment has improved. This is due to the measures put in place by the government to encourage growth in demand as well as managing oversupply. The handling of the Covid-19 crisis and the excellent country-wide vaccination program boosted market confidence, leading to early economic recovery. With banks offering record low-interest rates and [a] higher loan-to-value ratio of up to 85 percent, getting on the property ladder became more affordable.”

The UAE’s market of property dropped down in the wake of the three-year oil price shake-up that started in the year 2014 along with an oversupply. Due to the COVID-19, the economy slowed down further pressurized the market in the year 2020.

In addition to this, new programs, like visas for expatriate retirees and the development of the 10-year golden visa scheme to grab the attention of the foreign professionals to settle down in the UAE are expected to carry the local real estate markets.

According to a report of the ValuStrat, the size of the average transactions for ready homes grew 0.9 % quarter to quarter, whereas off-plan homes rose by 8.2 % to AED 2.3 million and AED 1.4 respectively.

Moreover, as per the report of Property Finder, the sales of the ready villas and townhouses in Dubai increased more than three-fold during the first quarter of the year as people sought more extended houses amid the COVID-19 pandemic. Also, the price of the median transacted for the ready apartment was AED 852 per sq ft in the first quarter, up 9.8 % on the initial quarter and 1.5 % on the same period of this same year. The median transacted price for the ready villas was AED 890 per sq ft, up 1.3 % on the quarter, and 13.7 % on the last year.

The same report says,
“All established freehold villa locations saw capital values improve since the last quarter, ranging from 1.8 percent to 5.4 percent. However, only half of the apartment locations improved in value. Some areas saw declines of up to 2.8 percent.”

According to ValuStrat, the best performing freehold areas were International City, Arabian Ranches, The Meadows, The Lakes, and Palm Jumeirah.

However, the residential capital value rose 0.8 % quarter on quarter with the 1st three months of this year, each presenting a positive trend for the very first time since the year 2014—prices still remain 10.9 % lower on the year on year basis.

Mr. Taimur said,
“The relatively low level of current valuations has made the Dubai real estate market more attractive to a wider pool of investors.”

Around 7,294 residential sets were built in Dubai during the first quarter of the year. The supply of total resident for this year is predictable at 46,316 apartments and 10,563 villas and townhouses, the report same said. More than 50 % of recent properties will be situated in Dubailand, Jumeirah Village Circle, Downtown Dubai, and Dubai Creek Harbour.

“In 2020, 36,015 units were completed, of which 27,435 were apartments and 8,580 were villas/townhouses,” ValuStrat added.

The report says that the rent of the residential properties fell by18.4 % for the apartments. The rents jumped by 3.9 % for the villas, as compared to the same period of the year 2020. The average annual rent for two-bedroom villas stood at AED 103,000, three-bedroom at AED 35,000, one-bedroom apartments were AED 52,000, two-bedroom sets were AED 78,000 and three-bedroom apartments were AED 114,000. Approximately, 80% of residential occupancy in Dubai was estimated. Also, the residential net yield averaged 6.1 % with the apartments.

Furthermore, the report added,
“Dubai’s residential net yields averaged 6.1 percent, with apartments at 6.4 percent and villas at 4.9 percent. Meanwhile, office sales transaction volumes in Dubai during Q1 were 41 percent higher when compared to the previous quarter and up 45.7 percent annually. Median office asking rents were relatively stable quarterly but saw a 3.2 percent annual decline.”

Also, as per an article by National News,
“In terms of retail supply, 12.2 million sq ft gross leasable area of shopping space was completed in 2020, most of which is expected to open this year. These include The Circle Mall JVC, Al Warqa City Mall, and The Agora Mall Jumeirah. An estimated 14,587 hotel rooms and hotel apartments are expected to be added by the end of 2021, ValuStra said. During the first quarter, approximately 1,286 keys were added to Dubai’s hotel stock from the opening of five hotels.”

The report of ValuStrat says,
“Citywide hotel occupancy reached 65 percent, down from 82 percent in the same period last year before movement restrictions to stem the spread of Covid-19 were put into place. The average daily rate was 17 percent lower annually at Dh390, and revenue per available room (RevPAR) fell 34 percent annually to Dh254.”

Source: The National News