Dubai’s prime residential capital values climbed 17.4 percent in 2021, as buyers flocked to the city for its competitive pricing, quality of life and warm climate in addition to the UAE’s successful handling of the Covid-19 pandemic.
That’s according to the latest Savills World Cities Prime Residential Index.
It said the emirate experienced “astonishing” price growth in the second half of 2021, reaching levels not seen since before the financial crash in June 2008, driven by strong demand which outstripped existing supply.
A successful vaccination program, opening of international borders and other national government measures were other factors behind the surge, Savills said.
Prime residential markets continue to revive globally with positive price growth seen across 28 of the 30 cities in the Savills Index in 2021.
North America outperformed all other regions, driven by rising incomes, affluent buyers and a return of urban migration, with Miami the strongest performer.
Savills added that along with the prime sales market, Dubai has experienced significant rental growth fuelled by national government measures and the return of professionals to the city.
On a year-on-year basis, Dubai’s prime residential rents jumped 25 percent in December, the highest among the 30 cities tracked in the index.
Rental values across the index increased by 3 percent in the six months to December, and over 85 percent of cities saw positive rental growth over the period.
Cities achieved their strongest half-year performance in seven years, driven by the great revival of mega cities New York, London, and Singapore as well as buyers desire for the lifestyle on offer in the likes of Dubai and Miami.
“Despite the threat of market cooling measures, such as rising interest rates, 2022 looks on course to continue the positive trend of 2021,” said Paul Tostevin, head of Savills World Research.
“Prime rental growth has made a staggering recovery in the second half of 2021, creating an ongoing imbalance between supply and demand which is underpinning increased prices. 28 out of 30 cities are set for growth in 2022, albeit at a more moderate rate than last year.
“Low-interest rates and rising incomes have increased mortgage affordability, while some cities (Miami, Dubai and Lisbon) have benefitted from the flexibility of remote working, and the desire for more space. Alongside a return to offices, education and travel will also deliver growth to all major cities.”
Swapnil Pillai, associate director, Middle East Research said: “The stellar performance of Dubai in our research findings is proof of the successful efforts of the government in making the emirate a destination of choice during the pandemic.
“Prime capital values in Dubai are still undervalued compared to its global counterparts which will set the stage for further price appreciation in 2022, albeit at a more sustainable level.”
Average prime capital value growth across the index is forecast to reach 4.3 percent this year, the second-highest in five years. All cities, except for Hong Kong and Paris, are set for positive growth in 2022.
Dubai is poised to grow above the average, up to 6 percent, as the strong demand spills over into 2022.
Across the 30 cities in the Index, the average gross yield over the year remained at 3 percent. 2021 front runners Dubai and Moscow took the lead with yields above 4.5 percent, while Asian cities recorded just under 2 percent.