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The capital values of residential properties in Dubai appear to be stabilising, after years of steady decline, according to ValuStrat’s Price Index (VPI).
“Early last year, the property market fell markedly as the coronavirus pandemic halted mobility around the world. Today, the sector remains weak but there are reasons for optimism,” ValuStrat said.
ValuStrat’s valuation-based index for the emirate stood at a “stable” 65.3 points as of December 2020, showing an insignificant monthly fall of only 0.1 percent, the lowest rate of decline in three years. On an annual basis, the index posted a 13.8 percent decline over 2019.
Prices in villa communities posted some minor increases, owing to high demand from price-conscious buyers, while apartments in other locations continued to be in decline.
“Capital values of homes approached stabilisation at the end of 2020, as the downward trend of recent years currently appears to be coming to a gradual end,” the consulting firm said.
“Stability and marginal improvements in prices were observed in 90 percent of established villa communities as well as 63 percent of freehold apartment areas,” it added.
Uptick in demand
Following the easing of lockdown and mobility restrictions last year, eager property buyers returned to the Dubai market, snapping up homes that are ready for occupancy. The increase in demand was largely driven by record low prices.
Cash-based sales in December posted a 19.5 percent increase over the previous month, with sales of existing ready homes registering an increase of 31.8 percent.
Off-plan sales also went up, but at a lower monthly rate of only 2 percent.
Declines
Capital values in popular developments like Dubai Sports City, Business Bay and Jumeirah Village fell by around 1 percent monthly. But apartments in International City showed a slight uptick, with prices posting a monthly increase of 0.5 percent.
“Given the high demand due to record low prices per square foot, villas demonstrated higher resilience when compared to apartments,” said ValuStrat.
Most residential units in freehold villa communities saw capital values stabilising in December. Some locations, including Arabian Ranches, The Lakes, Palm Jumeirah and Jumeirah Islands continued to increase, but only slightly.
The UAE’s property sector is expected to get a boost from positive news on the COVID-19 vaccine rollout and the World Expo event this year, but it might take a while for the market to return to pre-crisis levels.
Amira Sajwani, senior vice president at DAMAC, told Zawya earlier that the market recovery “will be a long one, perhaps 12 to 24 months.”
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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