In the third quarter, average residential property prices in the emirate increased by 19% annually and 5% compared to the previous quarter, resulting in a cumulative 30% rise since the first quarter of 2020.
The surge in Dubai's prime residential market can be attributed to a combination of factors, including limited supply and a resurgence in demand from key source markets like China and India. Knight Frank's report specifically forecasts a 5% price increase in the emirate's prime markets, encompassing prestigious areas such as The Palm Jumeirah, Emirates Hills, and Jumeirah Bay Island. Other segments of the residential market are expected to experience a 3.5% price growth.
Apartment prices soared by 19% annually during the third quarter, while villa prices jumped by 18%. Over the first nine months of the year, average residential prices witnessed a remarkable 15.6% annual increase.
Faisal Durrani, partner and head of research for Mena, highlighted the continued desirability of Dubai's prime markets, contributing to 4.8% of total transaction values in the first nine months of 2023. In this period, total transactions surged by 33.8% annually, with values rising over 36.7%.
Dubai's property market has made a robust recovery from the pandemic-induced slowdown, buoyed by government initiatives, such as residency permits for retirees and remote workers, as well as the expansion of the 10-year golden visa program.
The report also revealed that ready homes continue to dominate the market, with 51% of transactions from the first quarter to the third quarter being secondary market sales, highlighting the prevalence of end-users and second-home buyers.
While there are potential risks, including a global economic slowdown and regional tensions impacting the local economy, the overall outlook for Dubai's property market remains positive. Currently, there are 77,864 homes under construction, with an annual average of around 13,000 homes expected to be delivered over the next six years, indicating an undersupply in prime neighborhoods and the upper end of the price range.