Demand for off-plan homes in Dubai reached record highs in May, with the emirate witnessing a 41.6% month-on-month increase in new contract registrations, representing over 10,000 transactions and 69.4% of all residential sales, according to a new industry report.

Findings of the ‘ValuStrat Price Index - Dubai Residential Capital Values’ revealed that, last month, the emirate reported a 76.3% year-on-year increase in off-plan registrations for residential properties, with communities such as Jumeriah Village Circle and Meydan One driving up demand.

The report also found Discovery Gardens and Dubai Hills Estate broke their individual records in May with the highest number of off-plan homes traded in one month.

The volume of ready home transactions also grew 8.1% since last year, and 45.9% since April, with the majority of homes sold in Jumeirah Village Circle (8.3%), Business Bay (6.6%), Dubai Marina (5.9%), Downtown Dubai (5.3%), and Jumeirah Lake Towers (3.9%). 

In total, there were 16 transactions for ready properties priced over 30 million UAE dirhams, situated in Palm Jumeirah, Dubai Marina, Jumeirah Bay Island, Emirates Hills, and District One.

Capital values

Despite the flooding caused by April’s record rainfall in Dubai with several communities affected by the unprecedented deluge, strong demand for residential properties prevented any significant impact on home valuations, ValuStrat revealed.

Villa capital values continued to expand at similar monthly rates in May, with properties on the Palm Jumeirah witnessing an annual capital value uptick of 41.7%. The other big annual gains were recorded at Jumeirah Islands (41.1%), Dubai Hills Estate (37.5%), Emirates Hills (32.5%) and The Lakes (32.1%).

While most established villa communities in Dubai have exceeded their previous capital value peaks from 2014, according to ValuStrat, this month, also saw the Palm Jumeirah became the first apartment area to do the same. 

Monthly, apartment prices rose by 1.8%, 0.2% higher than April, marking a record annual growth of 22.4%. Among the areas with the highest apartment capital gains compared to the previous year were Discovery Gardens (34%), The Greens (32.6%), Palm Jumeirah (30.9%), Al Quoz Fourth (29.1%), and The Views (28.1%).

The VPI report also showed a correlation between the average price per square foot rising steadily, in a direct contrast to the size of the average home size that is shrinking in Dubai, raising fears over property valuations.

(Writing by Bindu Rai, editing by Seban Scaria)