The work-from-home boom and the resulting increased need for space helped increase the capital value by 4.2% in Dubai
Dubai ranks among top 30 global cities to record positive capital value growth for prime residential properties in the first six months of 2021, as the resilience of global residential real estate markets has continued unabated in the first half of 2021 — the fastest growth rate since December 2016 — a report by a leading global real estate advisor said Monday.
The boom in working from home and the resulting increased need for space has helped to increase the value of capital by 4.2% in Dubai. Cape Town, Moscow and Lisbon are other cities that have experienced a similar boom. Transaction volumes also increased compared to the first half of 2020, when many cities were in full lockdown.
Dubai’s success in dealing with the pandemic and proactive policy measures to revive the economy have played a crucial role in boosting demand for quality housing, Savills said in its World Cities Index report.
In the index, the capital value of prime residential properties in 30 cities rose 3.9% in the six-month period ending June 2021.
From June 2018 to December 2020, the average growth in capital value in cities was only 0.7%, due to changes in tax policies and overwhelming international uncertainty.
“The pandemic, which has exacerbated the severity of the slow growth, has caused many properties to shut down completely during the lockdown in many cities,” the report says.
Not all cities have performed equally well over the past six months. More than 70 percent of the sites recorded positive growth in capital value in the first half of the year.
Cities that have shown negative capital value growth are united in their historic dependence on international buyers in their core markets, a segment that has been severely constrained by travel restrictions.
The strongest growth in capital value was recorded by Chinese cities with six-month growth figures ranging from 7.9% in Guangzhou to 13.7% in Shanghai. Price increases in China accelerated in 2021 despite tightening funding and changes in local policy in an attempt to cool the markets. “Loan-fueled purchases have boosted growth in Chinese house prices in recent years, with buyers believing that real estate will likely remain the safest investment in China,” the report said.
While nearly 70% of locations affected by Covid-19 have experienced positive capital value growth over the past six months, cities that have long relied on international buyers in their core markets have experienced negative growth of capital value due to travel restrictions, says the Savills report.
Swapnil Pillai, associate director of research at Savills Middle East, said the return of international travel is likely to provide an increased supply of buyers for top-notch properties. “In addition, the economic recovery and growth driven by the increased vaccination rate in the UAE is expected to further boost buyer confidence and boost demand. While some degree of pandemic uncertainty remains, the blue chip residential sector is expected to remain strong for the remainder of the year. “
The report noted that the availability of good quality inventory, low loan rates, and relatively affordable real estate prices led to strong transaction activity that drove capital values in prime properties up. return of international travel to cities around the world will likely lead to an increase in the supply of buyers for prime properties
In the United States, Los Angeles and Miami lead the way with growth above 9.0% in the first half of 2021.
The index’s most expensive location, Hong Kong, had seen prices decline from 2019 to the first half of 2020 due to uncertainty in the region. However, capital values rose 1.9% in the year ending June 2021.
In London, after six years of decline, values held steady in 2020, then saw a 1.1% increase in the first six months of 2021, with the city looking good value for money .
Some cities have seen price changes shift from negative territory to positive territory in the first half of 2021. Singapore, Bangkok and Kuala Lumpur have benefited from increased demand for reduced supply.