After a challenging 2020, the real estate sector in Dubai got off to a positive start in the first quarter of 2021. Impressive growth in demand has been recorded and prices and transaction volumes have also increased. According to Dubai Land Department data, over 6,300 residential property transactions were registered in the first quarter, representing a total value of AED 8.9 billion. The purchase of existing properties accounted for almost 64% of all transactions. This reflects the local situation. In other words, the market has been mainly driven by the local living and working population over the past few months.
In addition, in some of the more popular residential areas, an increase in prices of between 5% and 8% was observed. This trend shows the confidence of investors in Dubai's real estate market. Over 60% of all investors entering the market in January as well as February 2021 were also new investors, according to the Dubai Land Department, further confirming the attractiveness of the local real estate market.
According to the Bayut & Dubizzle report, the area will maintain its position Jumeirah Village Circle area retains its position as the most sought-after area for affordable apartments and villas in Dubai. The area also Dubai Marina is attracting the interest of many buyers and investors thanks to its high-end properties and proximity to several tourist attractions. Established residential areas such as. Palm Jumeirah, Arabian Ranches, Jumeirah Lake Towers or Business Bay have been able to maintain their position and continue to be sought-after areas.
In terms of demand for luxury villas, the area is, as before Arabian Ranches is one of the winners. There is still increasing demand for ready-to-move-in villas in the secondary market, which is one of the reasons for the popularity of Arabian Ranches and which is already reflected in rental income.
The off-plan market in Dubai remains robust. The driver here is not a massive increase in interest for properties, but a slowdown on the supply side. Many of the announced development projects are sold out or only a few units are still available, mostly not the best of course. The market here is waiting for new announcements. In particular, smaller units in the luxury sector on Emaar Beachfront or in Dubai Marina are sought after.
Although the figures for the first quarter are encouragingly up on last year, it is important not to lose sight of the bigger picture. After all, the current numbers are compared to a weak base in 2020.
What we are definitely seeing is that price erosion in the market has stopped. Purchase prices in the secondary market have risen and now also justify the partly high off-plan prices of the last two years.
The market development of the last months is in line with our personal experience. We have seen a pleasing increase in enquiries and a keen interest in property investment in Dubai. We are positive that this trend will continue in 2021 and may even be boosted by the Expo activities.