Luxury residential New supply still Villa rents

prices climbing growing improving

Dubai
Residential
Market Review
Autumn 2021
 DUBAI RESIDENTIAL MARKET REVIEW | AUTUMN 2021

VALUES IMPROVE AT
FASTEST PACE SINCE 2014

Residential values in Dubai grew by 2.8% in the three months to the
end of September 2021, the fastest quarterly increase since 2014,
pushing average prices to AED 1,046 psf. Villas (4.9%) continued
to outperform apartments (2.5%) in Q3 and this is also reflected in
the annual rate of change. In fact, villa values are now 16.5% higher
than they were at this time last year, while apartments continue to
lag, with average prices growing by a more modest 1.7% over the
same period.
The relatively mute performance of apartment pricing is linked in
large part to COVID-19. The pandemic has driven a shift in attitudes
amongst Middle East home buyers, as evidenced by our 2021 Knight
Frank Global Buyer Survey. The need and desire to work remotely
more often means buyers are looking for larger homes, with room for
a home office, as well as outside space. 57% of our survey respondents
in the region said they would be most likely to buy a villa, or a home
in a more rural location for their next purchase, slightly higher than
the rest of the world’s respondents (51%) and we’re already seeing
evidence of this behaviour in action in the emirate.

The need and desire to work

remotely more often means buyers
are looking for larger homes

2
 DUBAI RESIDENTIAL MARKET REVIEW | AUTUMN 2021

Apartments Prices
AED psf

Downtown Business Bay Palm Jumeirah Dubai Marina Mohammed Bin Rashid City (MBR City) Dubai Hills Estate

3,000

2,500

2,000

1,500

1,000

500
Q1 2003
Q3 2003
Q1 2004
Q3 2004
Q1 2005
Q3 2005
Q1 2006
Q3 2006
Q1 2007
Q3 2007
Q1 2008
Q3 2008
Q1 2009
Q3 2009
Q1 2010
Q3 2010
Q1 2011
Q3 2011
Q1 2012
Q3 2012
Q1 2013
Q3 2013
Q1 2014
Q3 2014
Q1 2015
Q3 2015
Q1 2016
Q3 2016
Q1 2017
Q3 2017
Q1 2018
Q3 2018
Q1 2019
Q3 2019
Q1 2020
Q3 2020
Q1 2021
Q3 2021
Source: Knight Frank

Villas in high demand

Indeed, villa values have climbed by 14% since the start of the higher value properties experiencing a sharper rebound in values
pandemic, whereas apartment prices have retreated by 3.1%. and this applies to both apartments and villas. Since the start of the
Overall, apartments remain almost 30% cheaper than they were pandemic, apartment prices on The Palm Jumeirah (AED 1,710 psf)
during the last market peak in 2014, while due to the rapid rebound and Downtown Dubai (AED 1,780 psf) have risen by 13.7% and 8.2%
in villa prices, they are now, on average, 20% less expensive when respectively, while other locations, such as Dubai Marina, have seen
compared to 2014 highs. apartment values remain unchanged at about AED 1,290 psf.

This performance is however not uniform across the board, with

Average transacted values since the start of the pandemic

(Q1 2020 = 100)

Apartments Villas All Residential

115

110

105

100

95

90
Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Source: Knight Frank

3
 DUBAI RESIDENTIAL MARKET REVIEW | AUTUMN 2021

Palm Jumeirah prices closing in on new record highs

The same trend is echoed across the villa market, with The Palm expats and international investors home in the most prestigious parts
Jumeirah (AED 2,325 psf ) for instance experiencing a 16.9% rise of the city to secure larger and more luxurious homes. The pandemic
in prices since Q1 2020. The boom in ultra-prime home sales, i.e., has taught us all the importance of personal space and with a shift to
those priced at over USD 10 million, across Dubai is nowhere better hybrid working models emerging as the norm, families are seeking
reflected than on the Palm Jumeirah, where average transacted accommodation that delivers on space, luxury and exclusivity. This
prices, at over AED 2,100 psf, are at their highest level in over five accelerating trend has driven average transacted villa prices on the
years. What’s more, nearly half (47%) of the super prime homes Palm Jumeirah up by 40% over the last four years.
sold in Dubai between January and September were on the Palm
Despite accounting for a little over 2% of the total number of villa
Jumeirah.
sales across Dubai, the 90 villa transactions on the Palm Jumeirah
Unsurprisingly, together, the Palm Jumeirah and Emirates Hills drove almost 13.5% of the AED 15.8 billion city-wide villa transactions
account for almost 75% of super prime deals in the city. We do during Q2.
however have a new-comer to the exclusive super prime list of
The emerging community lifestyle on the island is also helping to
submarkets – Business Bay. The Dorchester Collection is going
bolster its appeal. The recent opening of Nakheel Mall has helped
to create a new icon for Business Bay and it was only a matter of
to cement the amenities available to the island’s residents, helping
time before the ‘halo-effect’ from Downtown Dubai spilled over to
to create not only an exclusive enclave, but one that epitomises the
surrounding markets, highlighting that not only is Dubai’s super
very definition of a 15-minute city – an emerging and highly desirable
prime market expanding, but it is also maturing.
legacy trend of the pandemic globally.
Villas across the city remain in high demand as both resident

Average transacted prices on the Palm Jumeirah

AED psf

Apartments Villas All Residentail

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

-
Q4 2019
Q4 2014
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014

Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q1 2019
Q2 2019
Q3 2019

Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021

Source: Knight Frank, REIDIN

4
 DUBAI RESIDENTIAL MARKET REVIEW | AUTUMN 2021

ISLAND LIVING IN
HIGH DEMAND

47% AED AED

of USD 10m+ residential
transactions this year have
2,325
average villa prices
1,710
average apartment prices
been on the Palm Jumeirah

16.9% 13.7%
increase in apartment
increase in villa prices since
prices since the start of the
the start of the pandemic
pandemic

Source: Knight Frank

5
 DUBAI RESIDENTIAL MARKET REVIEW | AUTUMN 2021

USD 10m+ home sales by submarket How far USD 1m goes

Q1-Q3 2021

162 sq ft
MONACO
Emirates Downtown Jumeirah
Hills Dubai Bay Island

226 sq ft
HONG KONG
4% 2% 323 sq ft
47% 28% 13% LONDON
2% 344 sq ft
4%
NEW YORK

Palm Jumeirah Dubai Hills District Business

Estate One Bay

1,700 sq ft
DUBAI

Source: Knight Frank, REIDIN Source: Knight Frank, REIDIN

Ultra prime sales hit a new record

The boom in luxury home sales is best reflected in the ultra

prime bracket, with January-September 2021 recording 54
sales, the highest number on record. The previous record of 31
was set in 2015. This trend has also contributed to the busiest
Further adding to the allure
overall September on record, with total home sales across Dubai
of the city is the fact that
crossing AED 12.2bn, double the previous September record of
AED 6.1bn set back during the heady days of the pre-GFC ‘gold
prices remain relatively
rush’ in 2009.
affordable, when compared
to other global markets.
USD 10m+ home sales now account for 7% for all transactions in
the city by value, compared to a long-term average of just 2%.

Number of USD 10 million+ homes sold in Dubai

60

50

40

30

20

10

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1-Q3
2021*
Source: Knight Frank, REIDIN

6
 DUBAI RESIDENTIAL MARKET REVIEW | AUTUMN 2021

RESIDENTIAL MARKET
DRIVERS
The surging levels of ultra-prime home sales is being fuelled by
three key factors, which we unpick below.

Vaccination leader Reopening of borders

The UAE has earned the coveted title of being the world’s most
The positive economic outlook has been further catalysed by the
vaccinated nation, with 88% of the population having received at
fact that Dubai was the first city in the world to reopen its borders
least two vaccination doses; 98% have received at least one dose.
to international travellers last December, following a short six-
This has had a tremendous impact on boosting market sentiment.
week lockdown period. The impact of this decision was an influx
Indeed, the latest Purchasing Manager’s Index reading for October,
of tourists, many of whom are ultra-high-net-worth-individuals
which tracks nation-wide business sentiment in the country’s all-
(UHNWI) who were able to experience first-hand the way in which
important non-oil sector registered it’s strongest reading in over
the spread of the pandemic was arrested in the city.
two years, lifted by the positivity percolating through the economy
following the government’s decisive handling of the COVID-19 In such a sentiment-driven market, this has had unintended, but
pandemic and also the opening of the World Expo in October. positive consequences. As outlined above, ultra-prime home sales
have reached record highs, fuelled in large part by the influx of a
Unsurprisingly, this has boosted GDP forecasts, with Dubai
new type of buyer: non-resident UHNWI from locations such as
expected to register growth of around 5.5% this year, with
Monaco, Switzerland and China, who are actively seeking the city’s
expansion set to reach around 5% next year, after contracting by
most expensive homes. Several record-breaking deals have been
-7.6% last year, which was the weakest growth in at least 20 years
registered so far this year as result of this influx of UHNWI-linked
(Oxford Economics).
capital.
Job creation rates are also set to quicken, with a 3.5% rise in
In fact, a new record was set in July with the USD 32.9 million sale
employment in 2021, following a 10.4% decline in 2020 (Oxford
of a villa on Jumeirah Bay Island to a European buyer. And prior to
Economics).
the sale of the Jumeirah Bay Island mansion, the most expensive
home to sell in 2021 was on the Palm Jumeirah, where One100 Palm
sold for over USD 30 million in March.

“Affordable” luxury
Further adding to the allure of the city is the fact that prices remain
relatively affordable, when compared to other global markets, with
USD 1 million for instance securing up to five times more prime
residential real estate in Dubai than London, New York, or even
Singapore.

7
 DUBAI RESIDENTIAL MARKET REVIEW | AUTUMN 2021

at Arabian Ranches III earlier in the year. DAMAC Properties too

Supply pipeline remains a downside risk
has revealed plans for Damac Lagoons, a new master-planned villa
community, adjacent to DAMAC Hills.
Countering the current upswing in values is the burgeoning supply
Should this trend of large-scale villa launches persist, there is a very
pipeline, which remains a key downside risk to our outlook on the
real risk of the villa segment of the residential market becoming
market.
over supplied, which would undermine the recovery now underway,
We expect to see some 125,000 units delivered by the end of 2025, which is largely down to excellent governance by the emirate’s
with approximately 100,000 units due before the end of next leadership.
year, according to advertised completion timeframes. Should the
c.78,000 homes scheduled for completion be delivered as planned,
2022 will see the highest number of new homes entering the market Residential tenants behaving in the same way as
since 2009, when 120,000 units were delivered. buyers

Experience however shows that inevitable delays to construction

Elsewhere, residential tenants too are behaving in the same way as
schedules will likely mean up to 30-40% of the 2022 total is likely
home buyers, opting to lease larger homes, with villas emerging as a
to be pushed into 2023, or even later, perhaps aiding the nascent
clear favourite.
recovery underway to be sustained into 2022.
This trend has had a direct impact on the performance of lease
Zooming in further to the projected supply, our research shows rates, with average lease rates for villas rising by nearly 15% over the
that just 15 submarkets will be responsible for nearly 60% of the last 12-months to AED 60psf. At AED 63 psf, not only do apartments
125,000-unit total. What’s more, villas are projected to account remain more expensive than villas, but average lease rates have
for just 20% of total new stock, hinting strongly at the continued declined by just over 5% in the year to the end of September 2021.
outperformance of villas, relative to apartments.
Examining the data further reveals that this trend has been
That said, developers who have been waiting on the sidelines since catalysed by the onset of the pandemic, with villa rental rates
before the pandemic and those whose ambitions were dampened growing by 9.7% since Q1 2021, while apartments have experienced
by the depth of the impact of the COVID-19 induced economic a 12.3% decline in average rents over the same timeframe.
slowdown appear to sense an opportunity to capitalise on the
Despite the strong rebound in villa rents, they remain 25% below
resurgence in demand for larger homes. Indeed, Nakheel for
the last market peak in 2014, while apartments still trail, with a
instance has already announced plans for a new villa community
substantial 40% discount on 2014 rental levels.
in Jebel Ali Village, while Emaar launched nearly 400 new villas

Top 15 submarkets for supply will deliver 60% of supply

number of units

Apartments Villas

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0
Akoya Oxygen

District Seven
Village Circle
Meydan One

Lake Towers

International
Dubai Creek

Dubai Hills
Downtwon

Jumeirah

Jumeirah

Jumeirah
Business

Al Furjan

Hartland
Harbour
Habour

Sobha
Estate
Dubai

Dubai

Arjan
Palm
City
Bay

Source: Knight Frank

8
 DUBAI RESIDENTIAL MARKET REVIEW | AUTUMN 2021

FORECAST RESIDENTIAL
S U P P LY

c. 125k
units
100k
apartments
25k
villas

2022 could see highest supply since 2009

Under Construction Launches

80,000

70,000

60,000
Number of Units

50,000

40,000

30,000

20,000

10,000

0
2021 2022 2023 2024 2025

Source: Knight Frank, REIDIN

9
 DUBAI RESIDENTIAL MARKET REVIEW | AUTUMN 2021

FOOD FOR THOUGHT

ESG to shape success of future real estate projects

Sustainability is high up on the agenda for the region’s home

buyers as evidenced by the Middle East results of our 2021 Importance of post-pandemic property
Global Buyer Survey. features (% of respondents)
Green is definitely the new black, and in the Middle East buyers
are increasingly focused on all things ESG. Half of our survey 18%

respondents cited the energy efficiency of their next home 13%

being a ‘very important’ issue, compared to 42% of global
6%
buyers. Furthermore, the green agenda appears to not just be a 14%
superficial flavour of the month.
18%
Of the eight different location criteria we asked buyers to rank
for their next home, proximity to good schools and access to 8%

healthcare were unsurprisingly important; however, proximity 14%

to green space and good air quality topped the list of location 8%

features and are more important to home buyers in the Middle

East than their global counterparts.

This sends a very clear and strong signal to developers and

Proximity to Access to good Walking distance Good air quality
planners around the region about how important ‘being greener’ green space healthcare to work

will be in driving the success of new projects. Furthermore, Proximity to restaurants, gyms, Good schools Good views (ocean,
retail and cultural amenities mountain, skyline etc)
the Climate Change Conference (COP 26) in Glasgow will help
to cement 2021 as the Year of the Green Re-awakening for real Walking distance to a public transport hub
estate and the green drumbeat is only going to grow louder as
Source: Knight Frank
investors and buyers zero in on this all-important issue.

10
 KEY CONTACTS

Andrew Cummings Faisal Durrani

Partner Partner
Head of Prime Residential, Middle East Head of Middle East Research
+971 56 1224 229 +971 4 4267 698
Andrew.Cummings@me.knightfrank.com faisal.durrani@me.knightfrank.com

Dean Foley
Associate Partner
Project Marketing
+971 50 1060 784
Dean.Foley@me.knightfrank.com

Imran Hussain, BSc (Hons) MSc, MRICS

Partner
Head of Residential Valuations
+971 50 3832 491
Imran.Hussain@me.knightfrank.com

RECENT MARKET LEADING PUBLICATIONS

Abu review
A biannual Dhabi ofOffice Market
key trends andReview .
the performance of
Summer|2021
Abu Dhabi’s office market
Apartment prices Affordability issues Demand dynamics
climbing emerging changing
Demand remains Rents falling for poor Institutional investment A biannual review of the industrial markets in
strong quality sotck market emerging

www.knightfrank.ae
Dubai and Abu Dhabi

Saudi Arabia Saudi Arabia Dubai and Abu

Abu Dhabi Office
Market Review
Residential Industrial Dhabi Industrial Summer|2021

Market Review
Q3 2021 Market Review Markets Review
H1 2021
Summer|2021

Saudi Arabia Residential Saudi Arabia Industrial Dubai and Abu Dhabi Abu Dhabi Office Market
Market Review Q3 2021 Market Review H1 2021 Industrial Markets Review Review Summer 2021

Our research reports are available at

Important Notice
knightfrank.com/research © Knight Frank 2021 - This report is published for general information only and not to be relied upon in any way. Although high
standards have been used in the preparation of the information, analysis, views and projections presented in this report, no
responsibility or liability whatsoever can be accepted by Knight Frank for any loss or damage resultant from any use of, reliance
on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of
Knight Frank in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without
prior written approval of Knight Frank to the form and content within which it appears.
Knight Frank UAE Limited (Dubai Branch) Prime Star International Real Estate Brokers (PSIREB RERA ORN: 11964 trading as
Knight Frank with registration number 653414. Our registered office is: 5th Floor, Building 2, Emaar Business Park, PO Box
487207, Dubai, UAE

@KnightFrankME @KnightFrankMiddleEast @KnightFrankMiddleEast

@KnightFrankME @KnightFrankMiddleEast