The prices in Dubai's prime residential areas, including the Palm Jumeirah, Emirates Hills and Jumeirah Bay Island, surged by 58.9% over the last 12 months. However, overall villa prices have experienced the slowest quarterly increase in over two years, according to a global property consultancy.
House prices in Dubai's prime residential areas grew by 10.6% in 2021 and rose by a further 2.6% during the first three months of 2022, Knight Frank said in its analysis. The latest increase leaves values 11.3% higher than Q1 2021, the highest rate of annual growth since January 2015.
Despite the sharp turnaround in prices, values are still, on average, about 25% below their 2014 peak, but villas are now just 12.9% below the last market high in 2014, the property consultant said.
Faisal Durrani, Partner – Head of Middle East Research, Knight Frank, said, “The positive market sentiment, driven by the government’s world-leading response to the pandemic, coupled with the successful hosting of the World Expo, the reopening of travel corridors and Dubai’s global safe-haven status continues to underpin the market’s rebound."
Knight Frank has identified a growing disparity in buyer and seller expectations.
"This trend is persisting in some segments of the market, which is starting to have the overall effect of causing average price increases to slow, just as Knight Frank previously forecast. Overall villa prices grew by 3.2% during Q1, down from 3.4% in the final three months of 2021, marking the slowest quarterly increase in over two years," the report noted.
However, this slowing price growth is not uniform across the board.
“The Palm Jumeirah and Emirates Hills continue to cement their iconic status, with global buyers continuing to jostle for an address in Dubai’s most exclusive enclaves. Villa prices on the Palm Jumeirah have increased by 38.6% in the last 12 months, for instance," Durrani said.
Palm Jumeirah registered villa price growth of 10.9% during Q1 alone. A custom-built 33,300-square-foot ultra-luxury mansion located on the north frond of Palm Jumeirah, which was sold in March for AED 280 million ($76.2 million), now holds the record for Dubai’s most expensive villa. Similarly, the rate of annual villa price growth in Emirates Hills stood at almost 20% at the end of Q1.
Andrew Cummings, Partner – Head of Prime Residential, Knight Frank, explained, “Yes, there is evidence that some locations may be starting to come off the boil, but this sits in stark contrast to the narrative playing out at the top end of the market."
"The Palm continues to see some exceptional record sales; however, these have predominantly been custom built villas, with traditional Nakheel built villas now reaching a level where buyers are starting to hold back. Likewise, Jumeirah Bay has seen a slowdown in land sales with prices for plots now exceeding AED 100 million," he added.
Knight Frank forecasts another 100,000 units will enter the market by the end of 2025, with over 50,000 homes due to be completed during the remainder of 2022. Just 25% of the homes expected by 2025 are forecast to be villas.
(Reporting by Seban Scaria; editing by Daniel Luiz)