Dubai property market sees strongest ever start to a year with 12,119 transactions

 The Dubai property market recorded its strongest start to a year, with 12,119 sales transactions to date, a report compiled by real estate data platform Property Monitor has shown.

This was a 17.7 per cent increase in transactions compared to 2017, which was the previous best start to a year, the company said.

The Dubai property market also registered a record 6,346 transactions last month, which was 43.5 per cent higher than any other February on record, the company said. February sales also grew 9.9 per cent on a monthly basis.

“Dubai remains very affordable by international standards with many European markets raising barriers to external investment, coupled with rising interest rates and inflation headwinds dampening the post-Covid recovery,” said Zhann Jochinke, chief operating officer of Property Monitor.

“This combination of factors could be added momentum for Dubai as a safe-haven market in the near term.”

The UAE’s property market has recovered strongly from the coronavirus-induced slowdown on the back of government initiatives such as residency permits for retirees and remote workers, as well as the expansion of the 10-year golden visa programme.

Property prices and rents in Dubai’s residential market will continue to increase in 2022 on the back of the emirate’s “strong economy”, a recent report by S&P Global Ratings said.

Dubai registered 2,576 off-plan transactions in February, down 4.9 per cent compared with January but an increase of 112.9 per cent on a yearly basis, said Property Monitor.

“While strengthening on transaction count basis, the market share of off-plan transactions fell to 40.6 per cent of the whole from 46.9 per cent last month,” the report said.

“However, with the significant amount of new development projects launched in recent months and several additional launches in the pipeline, the market share of off-plan sales is likely to again increase in the coming months.”

In February, more than 3,000 off-plan residential units entered the market for sale, said Property Monitor. Townhouses represented 58.5 per cent by volume of this new inventory, while apartments and villas accounted for 36.8 per cent and 4.7 per cent, respectively.

Emaar Properties led the off-plan market with a market share of 17.3 per cent, followed by Damac Properties, with 16.8 per cent and Azizi at 10.8 per cent, the research revealed.

Meanwhile, there were 2,180 resale transactions in February, which represented a market share of 34.4 per cent, up 4.5 per cent compared to January.

Dubai also recorded 1,580 mortgage-backed transactions in the same period, up 11.7 per cent from January levels.

“This month-on-month increase is largely the result of newly handed-over projects that are now eligible for home financing, particularly for townhouses, which saw loan volumes increase by 58.9 per cent. We foresee mortgage volumes resuming their downward trend as the cost of home ownership inevitably increases with interest rate hikes,” the report said.

The Dubai property market also recorded a 1.12 per cent increase in prices in February, the report said.

Average property values in Dubai stood at Dh1,001 per sq ft in February, down 18.8 per cent from the market peak in September 2014 and 27.6 per cent above the market trough of April 2009, Property Monitor said.

“Market headwinds and downside risks remain centred around the trajectory of inflation and interest rate rises amid global tensions,” Mr Jochinke said.

“While this may affect sentiment and raise a barrier to purchasing for some end-user buyers, we believe that other positive factors will outweigh any increase in the cost of credit and the market will continue its bull run.”

Mid-tier properties valued between Dh1 million and Dh3m accounted for the largest share of the Dubai sales market at 48.8 per cent in February, while low-priced units priced below Dh1m represented 32.9 per cent of the market. High-end properties above Dh3m made up 18.3 per cent of the sales market, the report added.

Rental yields increased to more than 6 per cent in February, with yields for townhouses experiencing the highest increase to 5.6 per cent from 5.2 per cent. Gross yields for apartments stand at slightly more than 7 per cent and villas at 5.1 per cent.

“We anticipate that rental market behaviour will mirror that of the sales market with the newer and most attractive developments being in high demand and leading yield curves higher. Older and less desirable communities and towers may suffer with slower demand and rents, which do not rise with the wider market,” according to the report.