Supply of new residential units in Dubai is going strong even during the Covid-19 pandemic with nearly 10,500 residential units handed over in Dubai during the first quarter 2021.
According to a study by real estate consultancy Core, an additional 26,500 units are expected to be handed over in the remainder of the year, taking total annual forecast for 2021 at over 37,000 units.
Prathyusha Gurrapu, head of research and advisory at Core, said despite the initial period of uncertainty and contrary to wider held beliefs this time last year, the UAE real estate sector and the overall economy have fared impressively well, thanks to robust government measures, fiscal incentives, social reforms and one of the highest rates of vaccinations globally.
“Dubai’s successful demonstration of mitigating Covid-19 and being open, relatively safer and connected is supporting new and existing businesses and providing comfort to end-users and investors, resulting in a rise in market activity across all sectors, particularly over Q1 2021,” said Gurrapu.
She said there has been a 64 per cent increase in secondary market transaction activity over Q1 2021 compared to Q1 2020.
Looking into the data closely, the villa market significantly outperformed with a spike of over 137 per cent, while apartments saw over a 41 per cent increase in secondary market transaction activity over Q1 2021 compared to Q1 2020. On the other hand, off-plan market activity continues to face headwinds, contracting by 29 per cent over the same period.
“Despite Covid-19 led market challenges, we are seeing a robust increase in residential secondary sales transactions in Q1 2021. A multitude of demand drivers are resulting in this increase, including competitive entry points, variety of options, change in loan-to-value ratios, low interest rates, visa reforms, an economic environment of safety and openness and the need for occupiers to upgrade residences to accommodate Covid led lifestyle changes,” she said.
Gurrapu pointed out that the market is seeing stabilisation in average villa sales values with prices showing sustained marginal upticks for the first time since 2014.
Gurrapu said the polarised sales performance between apartment and villa districts is being mirrored in the rental market. A slow yet steady uptick in villa rental values can be seen from Q4 2020, although the year-on-year values are still down two per cent.
“The prime villa districts of Palm Jumeirah and Emirates Hills buck the trend with 12 per cent and 11 per cent year-on-year increases while the affordable districts of Jumeirah Village Circle and Dubailand saw the sharpest decline in rents at -11 per cent and -9 per cent respectively. The trend of widespread rental contraction- in apartment districts lingers on with most districts witnessing sharp double-digit year on year declines,” she added.