Villa segment will continue to drive Dubai real estate market and is expected to post modest growth in rest of the three quarters of 2022 while the apartment category is expected to perform better than last year, experts say.
Analysts and market experts said the outlook for both segments remains positive but the villa prices move faster and are expected to cross January 2014 peak levels this year.
Referring to the ValuStrat Price Index, which measures Dubai’s residential capital value performance, they said property prices surged by 18.8 percent year-on-year basis and 1.2 percent month-on-month basis in March.
“Villas spearheaded this trend as prices jumped 34.1 percent annually, but saw a stable monthly growth rate of 2.1 percent last month. Apartments witnessed single-digit growth of 8.4 percent annually with marginal monthly growth of 0.4 percent in March,” according to the ValuStrat report.
In-villa segment, Jumeirah Islands (40.3 percent), Arabian Ranches (40.3 percent), The Lakes (37.1 percent), and Jumeirah Village (35.5 percent) were the top performers. Some areas such as Mudon and Green Community West performed better and recorded above-average price growth of 0.5 percent and 0.8 percent, respectively.
“Villas in Palm Jumeirah remained the most preferred choice as villa prices rose 5.3 percent and crossed their peak levels of 2014 in March,” according to the report.
The ValuStrat further said apartments in Palm Jumeirah (21.9 percent), Jumeirah Beach Residence (16 percent), Burj Khalifa (15.3 percent), The Views (10.9 percent), and The Greens (9.7 percent) performed better than other areas and recorded above average market rates of 8.4 percent.
Haider Tuaima, director and head of Real Estate Research at ValuStrat, said the outlook for Dubai’s villa and apartment markets for the rest of 2022 remains positive. He said villa growth rates are expected to stabilise while apartment prices are likely to improve in single-digit over the coming quarters.
“As per the ValuStrat Price Index, the villa capital values index reached 94.1 points last month, just 5.9 points below the price index base of January 2014. As the weighted average capital value for villas grew 6.3 per cent quarterly and 34.1 annually,” Tuaima told Khaleej Times on Sunday.
He said the apartment capital values index reached 69.5 points in March, still 30.5 points below the price index base of January 2014.
“The weighted average capital value for apartments grew 1.4 per cent quarterly and 8.4 per cent annually,” he said.
Atif Rahman, founder and chairman, Oro24 Real Estate Development, said Dubai has done everything right during the last two challenging years. From crisis management to regulatory reform and infrastructure development, which have been better than the rest of the world, hence it will continue to attract fresh investments, he said.
“The city is one of the top three destinations in the world in every aspect while the real estate prices are still way too low if compared globally so it remains affordable by every scale. We must also remember that historically the positive impact of the events like Expo escalate after the event is over,” he said.
“The world has experienced the ability of this great city through staging of Expo in the backdrop of a pandemic and I continue to witness new, fresh and virgin global interest in the city’s real estate,” he said.
“The outlook is bright and totally in favour of Dubai which offers a unique combination of safe investment, better returns, unmatched lifestyle and bright future through continued efforts of the government,” he added.
Ata Shobeiry, chief executive of Zoom Property, said the latest ValuStrat price index depicts that the first quarter of 2022 has ended on a high note, paving the way for a strong year in terms of market performance.
“Villas continue to show their dominance with a 2.1 percent monthly growth, while the apartment sector recorded a marginal growth of 0.4 percent in prices. With new projects in the pipeline and the influx of overseas investors, the gap between the price growth of villas and apartments is anticipated to narrow down gradually. Apartment prices are expected to increase as the market inches towards 2014 peak prices,” Shobeiry told Khaleej Times.
Ayman Youssef, vice-president, Coldwell Banker, said in the villa category, the luxury and ultra-luxury segments witnessed maximum price jump. This was mainly due to the pandemic instigating remote working situation that encouraged people to shift into bigger, better properties with more amenities.
“These properties are owned by high net worth residents as well as non-resident buyers. Moreover, there is a limited availability of properties especially in the ultra-luxury villa segment,” he said.
Youssef said the apartment segment was lagging in recovery, however, the luxury apartment segment in prime locations witnessed an outstanding performance specially the beach view facing units.
“We expect the market for villa segment to have a moderate growth while the apartment category is expected to perform better than last year on a demand generated by better GDP forecast of over 6.2 percent, employment opportunities and increase in population,” he said.
The ValuStrat report further noticed that Dubai’s volume of home sales increased 26.1 percent in March when compared to the previous month and 146.6 percent higher than the same period last year. The month-on-month performance saw cash and mortgage sales of ready properties, as well as off-plan Oqood (contract) registrations, grow 26 percent, the latter representing 43 percent of overall transactions.
The report also noticed 15 high-value transactions worth over Dh30 million last month, including a six-bedroom villa located in Emirates Hills sold for Dh75 million.
Topping the sales charts were properties developed by Emaar (24.3 percent), Damac (17.7 percent), Nakheel (6.9 percent), Select Group (4.1 percent), and Dubai Properties (3.2 percent). The report said top off-plan locations transacted in March included projects located in Business Bay (15.7 percent), Dubai Creek Harbour (9.2 percent), and Downtown Dubai (8.8 percent).
“Most transacted ready homes were in Damac Lagoons (16%), Jumeirah Village (5.8 percent), Dubai Marina (5.6 percent), and Business Bay (5.3 percent). Apartments in Dubai Hills Estate and villas in Jumeirah Islands broke their individual records with the greatest number of homes sold in one month since 2010.