Dubai Housing Boom Shows No Sign of Slowing as Prices Jump Again

Zainab Fattah, Bloomberg News

Residential villas on the waterside of the Palm Jumeirah in Dubai, United Arab Emirates, on Wednesday, Sept. 28, 2022. The emirate’s prime real-estate prices surged 70.3% over the 12 months through September, making it the biggest gainer on Knight Frank’s global index, which focuses on a city’s most desirable and expensive homes. , Bloomberg

(Bloomberg) --

For anyone hoping that Dubai’s red hot property market would start to cool this year, there’s bad news — it’s getting worse.

The average annual rent for a villa, or family home, in the emirate jumped 26% in the year through to February to reach 295,436 dirhams ($80,436), according to real estate adviser CBRE Group Inc. Average apartment rents, meanwhile, soared 28% to 99,737 dirhams.

The average sale price for villas rose 14%, while apartment prices rose 11% through February, according to CBRE.

Still, the jump in prices isn’t deterring investors or property developers. The number of transactions in February soared 43.9% to 8,515. Sales were mostly underpinned by developers starting new projects and the return of so-called off-plan sales when homes are sold ahead of construction. The number of these type of properties surged 78.1% in February, while secondary market sales rose 18.8%.

Demand for Dubai property is booming as the government’s handling of the pandemic and its liberal visa policies attract more foreign buyers. Home prices and rents have surged amid an influx of Russians looking to protect their wealth after the invasion of Ukraine, and as Israeli investors, crypto millionaires, and hedge fund executives set up in the city.

“We have seen the strongest start to the year, in demand terms,” Taimur Khan, CBRE’s head of research, said in an interview. “Developers, who mostly held off on new projects in the past couple of years, are getting back into building as they see strong demand.”

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Many developers in Dubai sell properties with buyers paying in installments sometimes before even a single brick has been laid. Although developers are building more off-plan properties, the scale of construction isn’t the same as 2014 when thousands of homes were launched, Khan said. Most development is now close to existing neighborhoods and is limited due to higher material costs and tighter credit.

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