European demand driving Dubai real estate's upward trajectory

European buyers are emerging as a key demographic driving sales with most being end users.

Dubai’s residential property market continues on its recovery path with prices increasing by 2.1 percent in June, reaching AED924 per sq ft ($251.6), the highest they’ve been in two years, according to the latest report by regional real estate intelligence platform Property Monitor.

Since bottoming out in November 2020, property prices have risen by 12.7 percent, although recovery is still uneven across the emirate. The strongest price increases were seen in the market for villas and traditionally sought-after communities, but Property Monitor’s report indicated it expects “recovery to balance out over the rest of 2021 and switch to a more tenable pace across Dubai”.

Ready-to move properties continued to drive demand with completed properties accounting for 62.1 percent of market share in June 2021 versus 37.9 percent for off-plan developments.

As new projects gather pace, however, sales of completed property transactions may lose some of that market share, the study indicated. Initial sales transactions, the first sale of a property from the developer for an off-plan or completed project, jumped 51.2 percent monthly to stand at 3,800 in June.

High end property transactions, valued at over AED10 million, recorded another strong month with 111 transactions recorded for this segment in June, slightly lower than the 117 in May, but still indicative of a buoyant market.

The number of ultra-luxury property deals in Q1 represented nearly double those seen in the first half of last year during the initial impact of the coronavirus pandemic.

European buyers are emerging as a key demographic driving sales with most being end users. Property Monitor attributed this to the relocation of entire families from Europe as opposed to the sole breadwinner living in Dubai, citing an uptick in school enrolments of new residents as further evidence.

Mortgages for villas and townhouses increased month-on-month while loans for apartments declined, reflecting buyer preferences. Overall, at 2,135, new loans for June fell by 9.4 percent over the previous month, driven by a decline in bulk mortgages, which are primarily taken out for apartment buildings.