Recording a 4.2 percent increase in capital values for the first half of 2021, Dubai’s prime residential properties market is performing well thanks to the return of international travel and the UAE’s successful handling of coronavirus, according to research by global real estate advisor Savills.
This is line with 29 other global cities in Savills World Cities Index where capital value grew by 3.9 percent in the first half of the year, the fastest growth rate since December 2016.
Dubai (along with Cape Town, Moscow, and Lisbon) was listed among the cities which benefitted from the “work-from-home boom and the resulting increased need for space”, as per Savills’s research.
“The return of international travel is likely to provide an increased supply of buyers for prime properties,” said Swapnil Pillai, associate director research at Savills Middle East.
“Furthermore, the economic recovery and growth led by increasing vaccination rate in the UAE is expected to further support buyer confidence and boost demand. Though a degree of pandemic-related uncertainty remains, the prime residential sector is likely to remain strong through the rest of the year,” he continued.
Out of the total number of cities in the global real estate advisor’s index, 21 posted positive capital growth, with Shanghai witnessing the highest capital growth at 13.7 percent.
From June 2018 to December 2020, the average growth in capital values across cities was only 0.7 percent as a result of changes in tax policies and severe international uncertainty, which was exacerbated by the global Covid-19 pandemic.
Meanwhile, transaction volumes are going up in comparison with the first half of 2020 when a lot of cities where in complete lockdown.
Swapnil Pillai, associate director research at Savills Middle East.
In Dubai, high sales transaction volumes from January to June 2021 accounted for a solid first six months of the year with a total of 27,373 transactions worth AED61.97 billion ($16.89bn), a 40.2 percent increase in volume of transaction when compared to H2 2020 and a 55.87 percent increase in value of transactions.
Savills expects this increased demand to be sustained. “More demand is also expected as cities continue to open up and buyers are attracted to the employment and cultural offerings,” the report indicated.
“The low-interest rate environment looks set to continue and will likely contribute to sustained higher sales volumes across most cities as buyers are attracted to the sector both for wealth preservation and capital value increases in many cities,” it added.
While nearly 70 percent of the locations affected by coronavirus experienced positive capital value growth in the past six months, cities with a long history of relying on international buyers in their prime markets saw negative capital value growth as a result of travel restrictions.
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