KHALEEJ TIMES, Tuesday, Aug 17, 2021 | Muharram 8, 1443
Dubai ranks among top cities in capital value surge
Emirates:
Dubai ranks among the 30 prominent global cities to record a positive
capital value growth for prime residential properties during the first six
months of 2021 as the resilience of the world’s residential property markets
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 on
Monday.
The work-from-home boom and the consequent increased need for space helped to
increase capital values by 4.2 per cent in Dubai. Other cities that experienced
similar boom include Cape Town, Moscow, and Lisbon. Transaction volumes have
also been going up in comparison with the first half of 2020 when a lot of
cities were in complete lockdown.
Dubai’s success in handling the pandemic and proactive policy measures to jump
start the economy played a crucial role in driving demand for prime residential,
Savills said in its World Cities Index report.
In the index, capital values of prime residential properties across 30 cities
grew by 3.9 per cent over the six-month period ending in June 2021.
From June 2018 to December 2020, the average growth in capital values across
cities was only 0.7 per cent, due to changes in tax policies and overwhelming
international uncertainty.
“The pandemic, which exacerbated the severity of the slow growth, caused many
properties to completely shut down during lockdown in many cities,” said the
report.
Not all cities performed equally over the past six months. Over 70 per cent of
the locations had positive capital value growth for the first half of the year.
The cities which posted negative capital value growth are unified in their
historical reliance on international buyers in their prime markets, a segment
that has been severely limited by travel restrictions.
The highest capital value growth was recorded by Chinese cities with six-month
growth figures between 7.9 per cent in Guangzhou and 13.7 per cent in Shanghai.
Price rises in China have accelerated in 2021 despite tightening of financing
and local policy changes in an attempt to cool the markets. “Lending-fuelled
purchases have been driving Chinese property price growth in recent years, with
buyers believing property is likely to remain the safest investment in China,”
said the report.
While nearly 70 per cent of the locations affected by Covid-19 experienced
positive capital value growth in the past six months, cities with a long history
of relying on international buyers in their prime markets saw negative capital
value growth as a result of travel restrictions, said 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 prime properties. “Furthermore, the economic recovery and growth led
by increasing vaccination rate in the UAE is expected to further support buyer
confidence and boost demand. Though a degree of pandemic-related uncertainty
remains, the prime residential sector is likely to remain strong through the
rest of the year.”
The report noted that the availability of good quality stock, low lending rates
and relatively affordable real estate prices led to strong transaction activity
which drove capital values higher across prime properties Return of
international travel to world cities will likely provide an increase in the
supply of buyers for prime properties
In the US, Los Angeles and Miami lead with growth above 9.0 per cent in the
first half of 2021.
The most expensive location in the index, Hong Kong, had seen declines in prices
from 2019 through the first half of 2020 as a result of uncertainty in the
region. However, capital values increased 1.9 per cent in the year to June 2021.
In London, following six years of falls, values remained flat in 2020 then
recorded an increase of 1.1 per cent in the first six months of 2021 as the city
looks good value.
Some cities have seen price changes go from negative to positive territory in
the first half of 2021. Singapore, Bangkok, and Kuala Lumpur benefitted from
increased demand for decreased supply.