The latest research report by global property consultancy Knight Frank said the average transacted prices rose by almost one per cent during Q2.
House prices in Dubai during the second quarter of 2021 accelerated at the fastest pace since the summer of 2014, as demand increased for larger homes with more outdoor space and a home office to cope with the remote working trend.
The latest research report by global property consultancy Knight Frank said the average transacted prices rose by almost one per cent during Q2, as sales of homes priced above Dh20 million were at the highest level since 2015.
"The momentum that began building late last year has been sustained and we are seeing a slow, but steady upward creep in transacted values. The confidence that has been injected into the economy by the government's phenomenal response to the pandemic has percolated across the economy - buyers feel more confident about life and are committing to home purchases in increasing numbers," said Faisal Durrani, partner - head of Middle East Research at Knight Frank.
He said it is the larger homes - villas - that are seeing the sharpest rebound, with prices now about 17 per cent below the last market peak six years ago.
The Knight Frank report said certain pockets of the market are rebounding faster than others, such as villas, so it is no surprise that multi-million-dirham home sales are also registering a spike in deal activity, with Dh20 million homes, in particular, remaining in high demand.
According to a recent report by ValuStrat Price Index, villas spearheaded a surge in Dubai's residential property value in the second quarter with a rise of 7.0 per cent when compared to the previous quarter and an annual gain of 6.3 per cent.
All villas monitored by the basket saw improvements not seen since 2014. The highest annual capital gains were recorded in Arabian Ranches at 10.3 per cent, Jumeirah Islands with 9.1 per cent, Dubai Hills Estate at 9.0 per cent, The Lakes with 8.2 per cent, Mudon at 7.7 per cent and, The Meadows with 7.2 per cent.
While average prices remain 26.3 per cent down on their previous highs, certain buyer groups have weathered the market's lopsided performance, with certain nationalities enjoying significant price appreciation.
"Factoring for currency wobbles against the UAE dirham since the summer of 2015 reveals a very different picture of when it comes to investor beneficiaries," Knight Frank report said.
Knight Frank's research revealed that 128 Dh20 million-plus homes have sold between January and June 2021, the highest level since 2015, when 137 deals in this price bracket were recorded. Last year, a total of 75 Dh20 million-plus homes were sold.
A recent projection released by Knight Frank shows that Dubai's construction industry will deliver an estimated 62,000 homes in the emirate this year and nearly 63,500 in 2022, which would be the most since 2009,
"Rather than subdue super-prime sales activity, the pandemic has accelerated it. Families are looking for larger homes, with more outdoor space and even room for a home office as many are hedging their bets on greater remote working going forward, echoing what we have been seeing elsewhere in the world. And what's more, they are willing to spend more for the privilege," said Durrani.
Maria Morris, partner, head of Residential at Knight Frank Middle East, said Dubai's prime and super-prime residential markets have continued on an impressive upward trajectory in the first half of 2021, with both local and global buyers continuing to see the appeal of Dubai for luxury real estate investment.
"This uptick in the Dubai property market has certainly been driven by various factors, such as the UAE's impressive Covid-19 vaccination levels and the government's remarkable reaction to the global pandemic, which has helped economic activity in the UAE to recover post-lockdown," said Morris.
Other UAE government initiatives such as the introduction of remote work visas, the introduction of the Golden Visa and 100 per cent foreign company ownership has also been influential in increasing the appetite for real estate in the region, said Morris.