Dubai housing boom shows no sign of slowing as prices jump again

FOR anyone hoping that Dubai’s red hot property market would start to cool this year, there’s bad news – it’s getting worse.

The average annual rent for a villa, or family home, in the emirate jumped 26 per cent in the year through to February to reach 295,436 dirhams (S$108,649.41), according to real estate adviser CBRE Group. Average apartment rents, meanwhile, soared 28 per cent to 99,737 dirhams.

The average sale price for villas rose 14 per cent, while apartment prices rose 11 per cent through February, according to CBRE.

Still, the jump in prices isn’t deterring investors or property developers. The number of transactions in February soared 43.9 per cent to 8,515. Sales were mostly underpinned by developers starting new projects and the return of so-called off-plan sales when homes are sold ahead of construction. The number of these type of properties surged 78.1 per cent in February, while secondary market sales rose 18.8 per cent.

Demand for Dubai property is booming as the government’s handling of the pandemic and its liberal visa policies attract more foreign buyers. Home prices and rents have surged amid an influx of Russians looking to protect their wealth after the invasion of Ukraine, and as Israeli investors, crypto millionaires, and hedge fund executives set up in the city.

“We have seen the strongest start to the year, in demand terms,” Taimur Khan, CBRE’s head of research, said in an interview. “Developers, who mostly held off on new projects in the past couple of years, are getting back into building as they see strong demand.”

Many developers in Dubai sell properties with buyers paying in instalments sometimes before even a single brick has been laid. Although developers are building more off-plan properties, the scale of construction isn’t the same as 2014 when thousands of homes were launched, Khan said. Most development is now close to existing neighbourhoods and is limited due to higher material costs and tighter credit. BLOOMBERG