Capital values in the emirate are still undervalued compared to its global counterparts
Dubai’s leading residential capital values soared 17.4% in 2021 as buyers flocked to the city for its competitive prices, quality of life and the UAE’s successful handling of the Covid-19 pandemic. 19, according to Savills World Cities Prime Residential Index.
The emirate has seen stunning price growth in the second half of 2021, reaching levels not seen since before the June 2008 financial crash, driven by strong demand that outstripped existing supply, a successful vaccination program, the open international borders and other national governments. measures.
Prime residential markets continue to rebound globally with positive price growth seen in 28 of the 30 Savills index cities in 2021. North America outperformed all other regions, driven by the rising incomes, affluent buyers and the return of urban migration. Miami was the top performer; experiencing high demand due to its warm climate and quality of life, a situation that echoes Dubai’s main market.
25% increase in rentals
Alongside the upscale sales market, Dubai has seen significant rental growth fueled by national government measures and the return of professionals to the city. On an annual basis, Dubai’s prime residential rents jumped 25% in December 2021, the highest among the 30 cities tracked in the index.
Index rental values rose 3% in the six months to December 2021, and more than 85% of cities saw positive rental growth over the period. Cities delivered their best half-year performance in seven years, driven by major revival in megacities in New York, London and Singapore, as well as buyer desire for the lifestyle on offer in Dubai and Miami.
“Despite the threat of market cooling measures, such as higher interest rates, 2022 looks on track to continue the positive trend of 2021,” said Paul Tostevin, head of Savills World Research.
“Prime rent growth rebounded in the second half of 2021, creating a persistent imbalance between supply and demand that underpins rising prices. About 28 out of 30 cities are expected to see growth in 2022, albeit at a more moderate pace than last year Low interest rates and rising incomes have increased mortgage affordability, while some cities (Miami, Dubai and Lisbon) have benefited from flexibility remote working and the desire for more space. Along with the return of offices, education and travel will also bring growth to all major cities.”
Dubai property prices still undervalued
Swapnil Pillai, Associate Director, Middle East Research, said: “Dubai’s outstanding performance is proof of the government’s successful efforts to make the emirate a destination of choice during the pandemic. Major capital stocks in Dubai are still undervalued relative to their global counterparts, setting the stage for further price appreciation in 2022, albeit at a more sustainable level.
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Average principal capital value growth across the index is expected to be 4.3%, the second highest in five years. All cities except Hong Kong and Paris are expected to see positive growth in 2022. Dubai is poised to grow above average, up to 6%, as strong demand will carry over into 2022 , while Miami and Berlin are expected to increase. of 10% or more.
In the 30 cities of the index, the average gross return over the year remained at 3%. Dubai and Moscow, leaders in 2021, took the lead with returns above 4.5%, while Asian cities recorded just under 2%.