The first quarter 2021 Dubai real estate review issued by leading local consulting firm ValuStrat – reported the highest recorded number of home and office units’ sales transactions, this was at a time when the office ValuStrat Price Index (VPI) has stabilised and the residential VPI saw quarterly improvements for the first time since 2014.
The ValuStrat Price Index (VPI) is a valuation-based index that tracks change in capital values for a representative fixed basket of properties. The residential VPI showed an average quarterly improvement of 0.8%, as the first three months of the year saw accelerated positive trends for the first time since 2014. All established freehold villa locations monitored by the VPI saw capital values improve since the last quarter, ranging from 1.8% to 5.4%. However, only half of apartment locations improved in value, some areas saw declines of up to 2.8%. On an annual basis, all locations witnessed price drops, some in single digits. Best performing freehold areas were International City, Arabian Ranches, The Meadows, The Lakes and Palm Jumeirah. Citywide, residential capital values were 10.9% lower than the same period last year.
“…A positive trend which commenced 2nd half of 2019, only cut short by the COVID-19 restrictions last year, now as we welcomed 2021, that trend has intensified with improved investor confidence, boosting demand, with record number of title deeds registered, and a gradual growth towards previous peaks…” said Haider Tuaima, Head of Real Estate Research at ValuStrat.
The Dubai VPI for residential rental values stood at 61.9 points, remained stable quarterly for the first time in two years. The average residential annual rent in Dubai was AED 76,910, apartments at AED 55,000 and villas at AED 211,485. Dubai’s residential net yields averaged 6.1%, with apartments at 6.4% and villas at 4.9%. Residential occupancy in Dubai was estimated at 80%
As far as residential supply is concerned, 2020 saw the completion of total 36,015 housing units of which 27,435 were apartments and 8,580 were villas/townhouses. For 2021, estimated upcoming supply currently stands at 46,316 apartments and 10,563 villas/townhouses. Approximately 7,294 units finished construction during the first quarter, equivalent to more than twelve percent of total expected supply this year.
‘…Improved buyer confidence appears evident in many parts of the Dubai residential market, with statistics showing increased numbers of sales transactions and price rises. Anecdotal agent evidence confirms strong demand and speaks of faster sales campaigns and competitive bidding occurring between some purchasers, especially in villa communities and now also in some of the more sought-after apartment locations too. Influence of Covid on housing requirements, and an undersupply in some communities and sub-sectors are factors as to why this is happening - other reasons may also include a perception that prices had actually over corrected and that perhaps they now represent good value, with potential for upside gain should this prove not just to be a temporary phase and the market continues to recover... ’ says Declan King MRICS – MD & Group Head Real Estate ValuStrat.
The valuation-based index (VPI) for Dubai’s office capital values remained relatively stable on a quarterly basis, grew a marginal 0.1% QoQ at 59.5 points. On a location level, Dubai International Financial Centre (DIFC), Jumeirah Lake Towers, and Downtown Dubai gained 6.8%, 2.3%, and 3.8% respectively. On office type and quality level, shell & core grade A offices saw the highest quarterly growth of 7.7% with no change annually.
Construction of an estimated 289,796 sq m (3.1 million sq ft) GLA of workspace was completed in 2020. Available data on remaining office space under construction is estimated at 99,111 sq m (1.1 million sq ft) GLA, expected for delivery this year.
Office sales transaction volumes during Q1 2021 were 41% higher when compared to the previous quarter and up 45.7% in a year. Office ticket sizes were 16.2% higher than last year, but 21.7% lower than Q4 2020.
Median office asking rents were relatively stable quarterly but saw a 3.2% annual decline. The citywide median asking rent for a typical office size stood at AED 835 per sq m (AED 78 per sq ft). Office occupancy in Dubai was estimated at 77.6%.
As of YTD February, the city had a total of 103,110 hotel keys and 25,910 hotel apartments. An estimated 14,587 hotel rooms and hotel apartments are expected to be added by end of 2021. Total international guests stood at 810,200 for the YTD February period, dropping by 75.2% YoY as global travel sentiment remained subdued. The citywide occupancy reached 65%, down from 82% in the year prior. The Average Daily Rate (ADR) was at AED 390, dropped 17% YoY and Revenue per Available Room (RevPAR) fell 34% YoY to AED 254.
© Press Release 2021
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