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Dubai: Property prices stabilising after 2 years of increase

Dubai: Property prices stabilising after 2 years of increase

25.08.2023

Dubai: Property prices stabilising after 2 years of increase

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‘Several developers are seeking to accelerate their construction programmes with the aim of bringing handovers forward by 3-6 months’

 

Property prices in Dubai are stabilising after rallying for over two years, with records set in Dubai with an uber-luxury apartment being put up for sale for a whopping Dh750 million.

Prices in the affordable areas are nearly stabilising but high-end and luxury segments of the property market are still witnessing an uptick in the rates. This shows that affluent people are still investing in the property market – a trend that started soon after the pandemic. As per Henley & Partners figures, it is estimated that around 4,500 high-net-worth individuals will flock to the UAE, mainly Dubai, this year to make the Emirates their home.

This has helped the local market set new records across beachfront locations including Palm Jumeirah, Jumeirah Bay Island, Bluewaters and Madinat Jumeirah Living, as well as ‘desert destinations’, such as Tilal Al Ghaf.

However, putting large ticket sales aside, sales price growth appeared to be slowing with quarterly increases of 2 per cent for apartments and 3 per cent for villas. Annual changes stood at 14 per cent and 15 per cent, respectively. In the second quarter, Dubai continued to record a flurry of new project launches, which are now reaching levels not seen since the pre-global financial crisis of 2008-09.

It saw the launch of the $20 billion The Oasis by Emaar and the multi-billion dollar Palm Jebel Ali are among other projects launched by Al Habtoor, Danube Properties and some European developers. According to real estate consultancy Asteco, around 11,000 residential units were delivered over the second quarter of 2023, with the majority of this stock – 9,400 – comprising apartments. Although villa supply slowed over the quarter, it is expected to pick up again in the second half of the year.

The pace of supply is forecasted to further increase thereafter with close to 20,000 completions planned for 2024-25. “In fact, we understand that several developers are seeking to accelerate their construction programmes with the aim of bringing handovers forward by 3-6 months,” added Asteco.

Where are apartment prices still rising/falling?

In the first half of 2023, around 17,000 units were delivered while another 12,900 are expected to be completed by the end of 2023.

According to Asteco figures for April-June 2023, prices in the high-to-luxury-end and mid-to-high-end areas are rising though at a slower pace ranging between three to four per cent.

Prices in Dubai International Financial Centre, Palm Jumeirah, The Greens and The Views and Jumeirah Lake Towers are still on the rise at an average of four per cent quarter-on-quarter.

While prices in Downtown, Business Bay, Dubai Marina, and Jumeirah Beach Residence and Jumeirah Village witnessed a three per cent rise in prices in the previous quarter. However, Discovery Gardens, Sports City and International prices have stabilized, seeing zero per cent growth in the previous quarter.

Where are villa prices still rising/falling?

The emirate saw 3,650 villas being completed during the January-June period while another 2,850 are set to be completed by the end of this year.

Villas and townhouse prices in the Meadows witnessed the highest surge, rising by six per cent quarter-on-quarter followed by a five per cent rise in Dubai Hills Estate, Jumeirah Park and Arabian Ranches. Meanwhile, Damac Hills 2 (Akoya Oxygen), Jumeirah Village and The Springs recorded a three per cent hike while Palm Jumeirah saw a two per cent rise in villa rates.

Palm Jumeirah, Business Bay and Downtown have been the star performer throughout the post-pandemic period on the back of strong demand for high networth individuals, achieving record sales. But the slowdown in the price rise reflects that the market is heading towards stability and more steady returns for investors. This is also another sign of a maturing market and returns are more stable in the mid-single rate.

The market trends reflect that mid to high-end properties will continue to offer decent returns to investors, going forward, while the affordable segment has apparently reached its peak and may not offer as good returns as the luxury segment.

 

TAGGED: https://www.zawya.com/en/business/real-estate/dubai-property-prices-stabilising-after-2-years-of-increase-b0xw03eg

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