Dubai real estate sector sees solid growth in 2021

Dubai’s real estate sector has recorded phenomenal growth 2021, with an impressive boom in rental and sales prices across prominent neighbourhoods according to Bayut & dubizzle's Dubai Property Market Report for 2021.

2021 has proved to be an exceptional year for real estate, with their combined inventory increasing by almost 75% and prices reaching unprecedented highs, the report said.

• Bayut & dubizzle’s combined data reveals that properties for sale in Dubai’s popular areas have recorded price increases of up to 35% in 2021.

• In the affordable segment, the most searched for areas by prospective buyers have been Damac Hills 2 and Jumeirah Village Circle for villas and apartments respectively. High-Net-Worth investors, on the other hand, have preferred integrated communities like Dubai Marina and Downtown Dubai for apartments and Arabian Ranches and Dubai Hills Estate for villas during 2021.

• The most popular areas of JVC, Al Nahda, Bur Dubai, Dubai Silicon Oasis and Deira have experienced declines between 1-12% in the average rental cost of affordable apartments as per Bayut & dubizzle data, with the exception of smaller units in Al Nahda. On the other hand, luxury flats in sought after areas have seen substantial increases in rental costs by up to 26%. The budget villas in Dubai’s popular areas have conversely become more expensive by up to 21% in 2021, while the rental rates for luxury houses in highly searched-for areas have observed massive growth of up to 41%.

• Tenants in search of affordable properties have mainly focussed on the apartments in Jumeirah Village Circle (JVC) and Al Nahda and the villas in Mirdif and Damac Hills 2. High-income tenants have mostly searched for units in long-time favourites Dubai Marina and Downtown Dubai for upscale flats, while Jumeirah and Al Barsha have remained the top choices for expensive villas.

• As per the Dubai Land Department (DLD), 19,996 residential transactions worth AED32.9 billion have taken place during 2021. This could be attributed to new investors entering the market for attractive property options, following the Expo 2020 led boost to the economy and the burgeoning demand for bigger homes by the residents.

DLD has also confirmed that a total of 602,714 Ejari contracts were registered in 2021, of which 315,222 were new contracts.

As prices in most popular areas of Dubai appreciate, it is important to acknowledge the emirate’s flexible legislations, strategic economic initiatives and effective response to and management of the pandemic that have made it a safe haven for investors.

According to the DLD, there has been a 100% increase in the investment value this year as compared to the figures recorded in 2020. The numbers show that 52,415 investors entered the real estate market in 2021 and contributed to the 72,207 new investments in the sector. Additionally, 35 real estate projects valued over AED11 billion were also completed in 2021, with 319 projects in progress, to meet the rising demand for real estate in Dubai.

Properties for sale

Apartments:

In the luxury segment, apartments for sale in Dubai Marina have remained popular with prospective investors and homebuyers.

• The long-standing favourite Dubai Marina, has seen the average sales price-per-square-foot for luxury apartments appreciate by 11% to average at AED1,298 in 2021.The appeal of the waterfront district continues to remain steady especially in the wake of the new Dubai Harbour development nearing completion.

• Bayut & dubizzle’s market analyses have also shown that homebuyers are searching for properties in popular upscale neighbourhoods like Downtown Dubai, Palm Jumeirah and Jumeirah Beach Residence, where the average price-per-square-foot for apartments rose by a margin of 13% to 27%. The suburban Dubai Hills Estate has also recorded a price increase of over 9% for luxury apartments in Dubai.

Sale prices for affordable apartments in Dubai have seen an overall upward trajectory in 2021.

• Sales prices for flats in Jumeirah Village Circle have remained stable, with the sales price-per-square-foot in 2021standing relatively unchanged at AED834.

• Business Bay, Jumeirah Lake Towers, Dubai Silicon Oasis and Dubai Sports City have also appealed to buyers in search of reasonably priced flats. These sought-after districts have recorded increases in the average sales price-per-square-foot of 1% to 11%.

Villas:

In 2021, Arabian Ranches remained a firm favourite for prospective buyers in search of upscale villas.

• The average sale price-per-square-foot of villa properties in Arabian Ranches has averaged at AED1,133 in 2021, following an almost 24% increase from the prices observed in 2020. The rise in demand for private villas and the limited inventory available has resulted in this rise in price for the well-established gated community.

• Villas in Dubai Hills Estate have also appealed to investors and buyers, where the average price-per-square-foot recorded a 21% increase to average at AED1,257.

• Other residential developments have attracted investor interest for expensive villas in Dubai include Palm Jumeirah, The Villa and Arabian Ranches 2, where sale prices increased between 14% and 35%. The most significant increase has been observed for Palm Jumeirah, where the average price-per-square-foot now stands at AED2,881.

According to the trends observed on Bayut & dubizzle, sale prices in the affordable villa communities have increased across the board in 2021.

• Damac Hills 2 (Akoya Oxygen) has reported an uptick of over 3% in the price-per-square-foot for sale of villas, averaging at AED586 in 2021.

• The price-per-square-foot for villas in popular suburbs like Dubailand and Jumeirah Village Circle have also appreciated by 11% to 13%.

• Integrated family-friendly developments such as The Springs and Damac Hills have also garnered interest in 2021 for budget villa sales. Both communities have experienced sales price upticks between 11% and 25%, with the highest increase recorded for properties in The Springs, where the price-per-square-foot now averages at AED1,073.

Rental Yields in Dubai

• For affordable apartments in the most-searched for areas in Dubai, Dubai Sport City has generated the most healthy return-on-investment of 7.18%.

• Dubai Marina with a projected ROI of 5.64% has continued to offer healthy rental yields in 2021 on buy-to-let apartments in the luxury segment.

• Budget villas in Jumeirah Village Circle have generated good rental yields averaging at 5.9% in 2021.

• The luxury homes in Arabian Ranches 2 with a projected ROI of 5.28% have also appealed to property seekers looking for healthy returns on their investments.

Off-plan Projects in Dubai

• In the affordable segment, Binghatti Mirage in Jumeirah Village Circle has been the most searched-for project for off-plan apartments, while buyers interested in reasonably-priced off-plan villas have preferred Rukan in Dubailand.

• Based on the combined data released by Bayut & dubizzle, Sobha Hartland in Mohammed Bin Rashid city has been the most-searched for option for luxury off-plan apartments, whereas District One has been the most searched for option when it comes to upscale off-plan villas.

Properties for Rent

Apartments:

Tenants looking for affordable properties have continued to mainly search for reasonably-priced apartments in Jumeirah Village Circle (JVC) in 2021.

• The asking rents for flats in JVC have remained largely stable. The average rents for studio flats and 1-bed units have remained unchanged at AED28k and AED43k respectively. Rental costs for 2-bed apartments in JVC have decreased by 1% to average at AED63k.

• Other areas that appealed to tenants in search of budget flats include Al Nahda, Bur Dubai, Dubai Silicon Oasis and Deira. The average rents in these areas have decreased across the board, recording declines of 3% to 21%. The highest price fall has been recorded for studio flats in Al Nahda that are now priced at AED21k.

Based on Bayut & dubizzle’s combined analysis, Dubai Marina has retained its popularity for luxury apartment rentals in 2021.

• The average rents in Dubai Marina have recorded upticks of 1% to 7% in 2021. The rental costs for 1-bed flats have averaged AED64,000 in 2021. The 2 and 3-bedroom apartments for rent are now priced at AED98,000 and AED146,000 on average, respectively.

• Downtown Dubai has also recorded an appreciation in average prices by up to 26%. The highest increase was recorded for 3-bed apartments following the handover of luxury properties in upscale projects like The Address The BLVD and Vida Residence Downtown.

• Based on the trends observed on Bayut & dubizzle, tenants have continued to prefer luxury waterfront apartments in 2021. Property prices in Palm Jumeirah and Jumeirah Beach Residence (JBR) have seen upticks between 10% and 24% in 2021, with the most prominent increments visible in 2 and 3-bed units in JBR. City Walk on the other hand, recorded declines of up to 11% in average rents.

Villas:

When it comes to affordable villa rentals in Dubai, Mirdif has continued to be most sought-after by prospective tenants during 2021.

• The average rents for villas in Mirdif have seen moderate declines of up to 5%. Rental cost for 3-bed houses has decreased by 5% to stand at AED84k. The 4-bed villas have averaged at AED107k and the 5-bed villas have been let for 115k per annum.

• Prospective tenants looking for reasonably-priced villas have also focussed on suburban districts such as Damac Hills 2 (Akoya Oxygen), Dubai South, Jumeirah Village Circle and The Springs, where rents have experienced upward price shifts of 1% to 21%. The 5-bed houses in Damac Hills 2 have recorded the most significant uptick in prices, increasing from AED77k to AED93k in 2021.

In 2021, luxury villa communities have seen a general uptrend in rental costs, based on the Bayut & dubizzle’s combined market report.

• Jumeirah has remained a firm favourite for luxury villa rental in 2021. The average rental costs for villas in Jumeirah have experienced upticks of up to 26%, with average rents now standing at AED178k for 4-bed and AED235k for 5-bed villas. The average rent for 6-bed villas increased by almost 26% to average at AED370k per annum.

• The independent, upscale villas in Al Barsha and Umm Suqeim have also seen rental prices appreciate in 2021 by 2% to 39%, consistent with the price shifts fuelled by increasing demand for bigger homes. The 6-bed rental villas in Al Barsha recorded the highest uptick in rental costs, subsequent to the handover of new units in the Bayti sub-community.

• High-income tenants have also considered upscale gated communities like Dubai Hills Estate and Arabian Ranches, where the average rents for homes have gone up by 9% to 41%, with the influx of newly handed over inventory. The highest price increases have been recorded for 4 and 5-bed villas in Arabian Ranches.

Commenting on the trends, Haider Ali Khan, the CEO of Bayut & dubizzle and the Head of EMPG Mena said: “It has been an interesting year for the economy of the country, and the contribution of the real estate sector towards this growth is stronger than ever. There have been some record-breaking sales and rental transactions in the emirate last year and our own inventory has increased substantially to meet the rising demand.

“If we look at data from DLD, the city’s real estate sector also attracted over 38,000 foreign investors from outside the GCC region in the last year alone, which is indicative of the growing demand for investment in Dubai from international investors. Thanks to the many initiatives launched by the government to safeguard the public and create a viable environment for investment, we can expect the demand to stay steady for Dubai real estate in the coming months too.”