Dubai real estate: Sales hit four-year high, exceeding expectations

The UAE real estate market was in the middle of a steadily gathering resurgence, when the Covid-19 pandemic interrupted that momentum, in Q1 2020. Nevertheless, following a model handling of the crisis, and a highly successful vaccination drive, the markets are once again set to resume their upward trend. And the most obvious confirmation of this are the latest figures released recently by consulting firm ValuStrat, which reported a rise in residential real estate values of 1.2%⁽¹⁾, month-on-month, in April 2021. This represents the highest growth rate of the figure in a single month, for seven years.

With the UAE at the forefront of nations leading a post-Covid resurgence of economic activity, and several positive influences beginning to make an impact – including the much awaited and rescheduled Expo 2020 to be held later this year; several new visa categories linked to real estate investments; incentives for first homebuyers; and a shift in preference from renting to home-ownership – the stars are aligning for the UAE real estate sector’s sustained growth.

A deeper dive into the figures

In addition to the stark indications of the highest month-on-month in value, over several years; the figures reported by ValuStrat also recorded a rise in the capital value of residential properties all across Dubai. While pre-pandemic positives were most evident in particular locations, the city-wide trend in greater valuation is being seen as a signal that the market has bottomed out, and then begun its rebound upwards. In fact, improved capital values were observed in 96% of the locations⁽²⁾ that were monitored as part of the ValuStrat Price Index.

Taking a broader view, the annual valuation-based index was 6.5% lower than the same month in 2020, as opposed to the double-digit annual devaluations which had been noted most frequently, in recent months. Sales volumes are another figure reported by ValuStrat, which reinforce the positive outlook. April 2021 recorded a 16.9% rise in sales volume, in the residential properties segment, compared to March 2021. A further breakdown of the figure shows a month-on-month rise in off-plan sales of 30.1%, and an 8.7% positive bump in the valuation of completed properties.

Placing the real estate rebound in the context of Dubai’s wider economy

Previously recorded growth in the Dubai real estate market, over recent months, was most evident in a rise in the overall volume of sales, based on factors that typify a buyer’s market – such as low prices and interest rates, incentives for first homebuyers, and a larger pool of investors attracted by a new visa regime with residency status linked to real estate investment.

The recent rise in the capital value of properties, on the other hand, needs to be seen within the context of the overall post-pandemic rebound of the Dubai economy. According to the Dubai Statistics Centre, the Emirate is projected to grow 4.0% in 2021⁽³⁾, after a contraction of 6.2% in 2020. The real estate market sentiment has been clearly buoyed by the UAE managing to escape the worst of the negative impact of the Covid-19 pandemic.

With a significant part of Dubai’s population re-engaged in business-as-usual, and the overall economy back on its feet as well, the post-pandemic rise in demand is finally being reflected in a concurrent rise in property value. The much-awaited and anticipated resurgence of the city’s real estate sector seems to now be evident in multiple metrics that matter, and all indications are that the momentum will continue to build, in line with the larger economy.