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Tue 11 Aug 2020 04:10 PM

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Dubai's prime residential market holding up despite 3% drop in capital value

Latest Savills research reveals emirate still holds great value for international investors

Dubai's prime residential market holding up despite 3% drop in capital value

Dubai continues to be the preferred prime residential destination for investors, despite prime capital value in the first six months dropping by three percent.

According to the latest Prime Residential World Cities Index, from Savills, capital and rental values in the emirate have witnessed a downward trend due to an imbalance in supply and demand.

Swapnil Pillai, associate director, Research Middle East at Savills said: “At an average $560 / psf, it offers great value for international investors looking for investment grade residential assets and relatively high yields compared to its global peers.

The associated cost of purchasing a property is low at circa seven percent, compared to other established and emerging hubs where it can reach anywhere between 15 percent – 35 percent. The recently relaxed LTV norms and lower bank lending rates should support a recovery in activity in the second half of the year, while a limited pipeline of new project launches should result in a positive long-term outlook.”

Just nine out of the 28 cities monitored saw positive prime capital value movements over the first six months of 2020.

Seoul and Moscow recorded the strongest price rises with an increase of 5.5 percent. Mumbai saw the largest decline over the first half of 2020, down 5.8 percent.

Sophie Chick, head of department, Savills World Research, said: “Looking forward, although much depends on the economic situation, which is still materialising in a lot of cities, it’s important to remember that this is not a financial crisis as it was in 2008 and we’re not anticipating the falls in values that were seen during that period.”

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