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Are Dubai apartment prices stabilising even as demand surges?

Apartment prices in Dubai have finally hit a plateau after months of strong growth, according to a new report. 

The latest ValuStrat Price Index (VPI), which tracks the market performance of residential properties across the emirate, saw a moderate 0.9% monthly increase in October 2022, indicating a slow pace of price growth. 

Apartments registered a slower 0.6% monthly change, with prices now averaging AED899 per square feet ($244.76), while villa prices went up by 1.2%. 

According to ValuStrat, apartments in several areas in Dubai, including International City, Business Bay, Jumeirah Village, Discovery Gardens, Dubai Sports City, Remraam and Dubai Production City, showed no monthly change in capital values. 

“Freehold apartment prices plateaued in most areas of Dubai,” ValuStrat said in its report.

Capital gains of apartments in most areas in Dubai have not seen any improvement since last year and have been stable on a monthly basis, according to Haider Tuaima, Director and Head of Real Estate Research at ValuStrat.

“This is mainly due to a fundamental market demand/supply dynamic. When we look at upcoming supply, Dubai Land and Jumeirah Village alone contribute 21% of overall new supply of mainly apartment buildings in the coming two to three years,” Tuaima noted.

“That, in our opinion, is the main reason why we are not seeing capital growth in those areas, particularly within the E311 and E611 corridors.” 

Property prices in Dubai have been rising on the back of strong demand from investors from the region and abroad.  

As of the third quarter of the year, average apartment sales prices rose by 3% compared to the previous quarter and 17% compared to a year earlier, according to Asteco. Villa prices also registered a 3% quarterly and 19% annual increase. 

Interest in Dubai’s off-plan properties remains strong, but Asteco noted that high interest rate and property price rises have “started to impact investors and end-users with more limited capital/resources”. 

Annual increase 

Apartments in Dubai still registered a 7.2% increase in capital gains in October compared to a year earlier. In some popular locations, the increases were more significant, with apartment units in Palm Jumeirah, Burj Khalifa and Jumeirah Beach Residence posting annual increases of 15.6%, 12.7% and 11.6%, respectively. 

For villa properties, prices in October were up 26.2% compared to last year. The top performer was Arabian Ranches, where prices went up by 29.5% followed by Jumeirah Islands (27.9%), The Meadows (25.4%) and Emirates Hills (24.9%). 

Overall, demand for properties in Dubai remained strong in October. Home sales during the month were up 11.1% monthly and 90.6% annually, according to ValuStrat. 

The month saw 26 transactions worth more than AED30 million each. One such transaction was for a six-bedroom villa located in Jumeirah Bay that was sold for AED130 million.