The first quarter 2022 Dubai real estate review issued by leading international consulting firm ValuStrat – debuts two additional valuation-based price indices covering the Dubai real estate market, VPI Industrial Logistics Capital Values, and VPI Prime Residential Capital Values.
The valuation-based price index, VPI Residential Capital Values, grew 18.8% annually to 79 points. However, Dubai’s residential prices saw quarterly growth rates slow from 5.1% in Q4 2021 to 3.6% in Q1 this year. On the sub-market level, villas and townhouses surged 34.1% annually and 6.3% quarterly to 94.1 points. Apartments improved just 8.4% YoY, 1.4% QoQ reaching 69.5 points. The highest annual villa price gains were registered in Arabian Ranches (40.3%), Jumeirah Islands (40.3%), The Lakes (37.1%), Jumeirah Village Triangle villas (35.5%), and Palm Jumeirah (35%).
A strong start of the year for home purchases, as the first quarter ended with record-breaking sales transaction volumes and recorded the highest residential quarterly transactions in history with 7,936 off-plan sales, up 117.7% YoY totalling more than AED 15 billion and 9,586 ready home sales rising 56% YoY equivalent to a total value of no less than AED 25 billion.
Tracking prime residential properties around Dubai, the newly introduced VPI Prime Residential Capital Values, registered 84.9 points after a 19.2% annual leap. On a quarterly basis, performance was lower than the second half of last year. Highly desired villas and apartments within prime locations saw capital values increase 31.5% and 10.5% respectively.
“… Interestingly, demand for high-end properties located in established prime areas has more than doubled since pre-pandemic times, as the share of sold homes worth more than AED 7 million, jumped to 5% in Q1 2022, up from 2% the same period in 2019. Demand for larger homes also increased, the average transacted unit size grew from 1,524 sq ft in 2019 to 2,014 sq ft this year, this suggests that villas and large apartments are equally in high demand…” said Haider Tuaima, Director & Head of Real Estate Research at ValuStrat.
The Dubai VPI also analyses residential rentals. Overall citywide residential asking rents climbed 23.7% YoY to 70.6 index points, 29.4% lower than Q1 2014. On a quarterly basis, rents increased 4.9% on average. Compared to the same period last year, asking rents for apartments grew 20.3% to an average of AED 87,713 per annum. Villas headlined with the highest annual asking rental increase since 2014 of 29.1% to an average of AED 251,114 per annum. The average residential occupancy rate stood at 83.7%.
As far as residential supply is concerned, the estimated number of new build units to enter the market this year stands at 44,708 apartments and 11,172 villas/townhouses. Total estimated completions as of the first quarter stood at 5,745 apartments and 493 villas, equivalent to 11% of preliminary estimates for the whole of this year.
The first quarter ValuStrat Price Index for Dubai’s office capital values witnessed annual price increases of 25.2%, this is after a sustained acceleration in quarterly capital gains, as Q1 was 6.9% higher than Q4 last year. The ValuStrat Price Index for Dubai office capital values registered 74.5 points in Q1 2022, still 25.5% lower than the same period in 2015.
Office sales transaction volumes during Q1 2022 were 1.7% lower when compared to the previous quarter but jumped 34.9% compared to last year. The median transacted price stood at AED 8,934 per sq m (AED 830 per sq ft), rising 15.8% quarterly and growing 27.4% from the same period last year.
Median office asking rents saw continued increases both annually and quarterly jumping 16% and 5.5%, respectively. Asking office rents for this quarter rose 12.3% when compared to the same period two years ago. The citywide median asking rent for a typical office size stood at AED 969 per sq m (AED 90 per sq ft). Office occupancy in Dubai was estimated at 80%.
The first quarter of 2022 ended with a total of 114,536 hotel rooms and 25,656 hotel apartments within 769 hospitality establishments. Total international visitors reached 3.97 million, soaring 213% YoY. Hotel occupancy averaged 82% during the same period, up 18% YoY. ADR and RevPAR stood at AED 649 and AED 534, growing 64.7% YoY and 112.7% YoY respectively.
The first and only valuation-based price index covering industrial capital values has launched. The ValuStrat Price Index for industrial logistics which covers 8 areas in Dubai, grew 5.1% annually and 1.5% quarterly to 105.1 points. The VPI is based on re-valuing existing properties on quarterly basis considering various quality specifications for each area. The highest annual performing locations were JAFZA South (5.3%), Al Qouz (4.7%) and Ras Al Khor (4.1%). The weighted average price for an industrial logistics warehouse as of Q1 2022 was AED 2,228 per sq m (AED 207 per sq ft). Dubai Logistics City registered the highest price of AED 3,132 per sq m (AED 291 per sq ft). JAFZA South saw the lowest price of AED 1,862 per sq m (AED 173 per sq ft).
“…ValuStrat was an early pioneer in real estate indices here in the UAE, introducing our very first VPI index back in 2015, and growing our stable of performance indicators to now include 7 indices across several asset classes in both Dubai and Abu Dhabi. The Q1 ’22 introduction of an index for logistical space, and another for prime residential, speaks to the market focus on both these property segments and investor appetite for accurate useable data. Powered by our expert team of RICS Chartered Valuation Surveyors, I am confident these new indices will quickly become trusted benchmarks in the Dubai property market … ” said Declan King MRICS, Managing Director & Group Head of Real Estate at ValuStrat.
ValuStrat is a leading international consulting firm headquartered in Dubai providing Advisory, Valuations, Research, Transaction Advisory, Industrial Consulting and Due Diligence services across a diverse range of industry sectors since 1977. Offices in the UAE, UK, Saudi Arabia, Pakistan, and Qatar serve over 1,000 corporate clients in the Middle East. Client base includes financial institutions, local corporates, multinationals, governments, SMEs, family businesses and start-ups.
About the ValuStrat Price Indices
The ValuStrat Price Index or the VPI, is a valuation-based price index constructed to represent periodic change in capital values and rental values experienced by typical residential and commercial properties. The VPI for Dubai’s residential capital values is updated on a monthly basis. The VPI for Dubai’s residential rental values is updated on a quarterly basis. The VPI for Dubai’s office capital values is updated on a quarterly basis. The VPI for Dubai’s industrial logistics capital values is updated on a quarterly basis. The VPI applies weighted averages using data samples representing up to 95% of the market across the city and is built by our expert RICS Registered Valuers.