Prime capital values in Dubai climbed 17.4 percent in 2021, as buyers flocked to the city for its competitive pricing, quality of life and UAE’s successful handling of Covid-19 pandemic, says Savills World Cities Prime Residential Index.
Dubai saw huge price growth in the second half of last year, touching levels not seen before the financial crash in June 2008.
The strong demand surpassed current supply, a successful vaccination program, opening of international borders and other national government measures.
Prime residential markets have continued to revive globally, as positive price growth has been noticed in 28 out of 30 cities in the Savills Index 2021. Going by global trends, North America outperformed all other regions, driven by growing incomes, affluent buyers, and return of urban migration. Miami was the strongest performer, which saw high demand due to its warm climate, good quality life and a situation that echoed in Dubai’s prime market.
Apart from prime sales market, Dubai experienced considerable growth in rentals, fuelled by national government measures and return of professionals to the city.
On a yearly basis, Dubai’s prime residential rents spiked 25 percent in December 2021, which is the highest among 30 cities tracked in the index.
Rental values across the index grew by 3 percent in six months until December 2021. More than 85 percent of cities witnessed positive rental growth during the period. Cities also saw their strongest half-year performance in seven years, which was largely due to revival of megacities such as New York, London and Singapore, and buyers desire for lifestyle on the offer in the likes of Dubai and Miami.
The Head of Savills World Research, Paul Tostevein, said “Despite the threat of market cooling measures like rising interest rates, 2022 looks on course to continue the positive trend of 2021.”
He pointed out that 28 out of 30 cities are set for growth in 2022, although at a more moderate rate than last year.
Mortgages are more affordable given the low interest rates and growing incomes, although some cities such as Dubai, Miami and Lisbon have benefitted from flexibility of remote working. Further, return to offices, education and travel are also likely to deliver growth across all major cities.
According to Swapnil Pillai, Associate Director, Middle East Research, the stellar performance of Dubai indicates the successful efforts by the government in making the emirate a destination of choice during the pandemic. However, prime capital values in Dubai are still undervalued in comparison to its global counterparts, and this is likely to set stage for further price appreciation this year, although at a sustainable level.