Dubai’s residential sector continues to post strong recovery gains, with average prices increasing by 4.4% in the year to August 2021, according to the latest on UAE’s real estate market by CBRE. This is the highest rate of growth that Dubai’s residential sector has seen since February 2015.
The report noted that average apartment prices grew by 2.5% during the year to August 2021, standing at AED 1,040 per square foot. Meanwhile, average villa prices grew by 17.9%, standing at AED 1,156 per square foot.
While sale prices have picked up, average rents in Dubai’s residential sector dropped by 2.7% for the period, the report noted. Further, although apartment rents fell by 5.2%, average villa rents picked up by 15.5% (the highest growth rate for villa rents so far).
Despite this growth, both sale and rental prices continue to be below peak rates seen in Dubai’s residential sector during 2014-2015, the report noted.
New supply for Dubai’s residential sector amounted to 24,595 units for the period, and a further 24,700 units are expected to be delivered during the remainder of the year.
Transaction volumes in Dubai’s residential sector record high points
Transaction volumes for the sector grew by 56.3% by August 2021 year-to-date, compared to the same period in 2019, and 76.8% year-on-year. This is according to preliminary estimates by CBRE.
In the secondary market, transaction volumes surged by 120.7% by August 2021 year-to-date, as compared to the same period in 2020. Off-plan deals also rose by 39%.
The report noted that despite these strong gains, the share of total sales by this segment in Dubai’s residential sector has dropped from 63.4% in Q1 this year, to 52.8% in Q3.
At the same time, however, it also said that sales volumes for the first three quarters this year have outdone those of all but two of the last 10 years in Dubai’s residential sector. The report also anticipated that transaction volumes will continue to see an upward trend over the rest of the year, on account of affordable mortgage rates.
From a macro perspective, the UAE is expected to see a year-on-year GDP increase of 2.1% this year, with non-oil GDP expected to grow by 3.8%, the CBRE report said. In 2022, estimates suggest a GDP increase by 4.2%, with the non-oil sector expected to grow at 3.9%.