ALBAWABA – Dubai apartments surged by the most in nearly a decade in August, amid a property boom that has transformed the city into one of the world’s hottest housing markets, according to Bloomberg.
Prices of Dubai apartments rose 20 percent on average in the year through August, marking the best performance since 2014, real estate adviser CBRE Group Inc. reported.
Notably, apartments make up about 85 percent of the housing supply in Dubai, according to Bloomberg.
Gains in the Dubai apartments segment of the housing market repassed the growth in prices of single-family unit homes, known locally as villas, currently at 17.3 percent, as reported by CBRE.
Dubai’s real estate rebound comes after a seven year slump. The rise in the prices of Dubai apartments was fueled by an influx of newcomers. From crypto millionaires and bankers relocating from Asia to wealthy Russians seeking to shield their assets.
More so, the government has also brought in a slew of reforms, relaxing visa laws and introducing visas for job seekers and freelancers.
Even as prices for single-family homes soared from pandemic lows, the recovery for apartments had so far been slower. Average prices for Dubai apartments are still 9.6 percent below their peak in 2014, while those for larger houses are 8.7 percent higher, according to CBRE.
Likewise, property valuation and research firm ValuStrat reaffirmed CBRE’s finding. The firm’s data, which is based on a fixed basket of market representative properties, showed the prices of Dubai apartments rose by 10 percent on average in the year to August, Bloomberg reported.
The biggest annual gains were on the man-made island of Palm Jumeirah, where prices surged by a fifth, the firm underlined.
“As affordability gets constrained, demand for apartments is surging because they tend to be cheaper in general,” Taimur Khan, CBRE’s head of research, said in an interview with Bloomberg.
Dubai apartments have seen higher demand as they are less costly than villas - Shutterstock
“Also, rental yields in Dubai are considerably higher than what investors can get in London, New York or Hong Kong,” he added.
The average annual rent for Dubai apartments is $29,000 and $87,821 for villas, according to CBRE.
The yield for apartments in Dubai — where the currency is pegged to the US dollar and rental income is not taxed — stands at 7.34 percent, according to CBRE. By comparison, the average yield in London is 4.18 percent, and in prime central London – where the overwhelming majority live in apartments - it’s even lower at 3.6 percent.
Globally, Residential sales above the $10 million mark fell 13 percent in the second quarter of the year, compared with last year, according to a report by real estate consultancy Knight Frank.
The firm tracks purchases in 12 markets worldwide, including the United Arab Emirates’ (UAE) Dubai.
Total sales in the 12 months through June dipped to just under $30 billion, compared to $40.7 billion in 2021. But that’s still well ahead of pre-pandemic sales of $18.6 billion in 2019, the firm’s data showed.
As foreign wealth continues to flood into the UAE, Dubai ranked top in terms of volume during the second quarter of 2023, Bloomberg reported.
The city saw $1.6 billion in total sales over $10 million during the period compared to $797 million in the second quarter of 2022. New York saw the second most with $1.1 billion in second quarter sales, followed by London with $1 billion.
