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Understanding Property Pricing Index

Posted by Geeti Bhatt on September 26, 2022

Crunching some numbers to better understand the rising property market of Dubai. Although there are a number of indicators that identify that direction of the market whether it is bullish or bearish, or in other words, if the prices are going up or down. However, the previous pattern historical have proven to be one of the key that helps in identifying the previous demand and whether the market is headed to.

In order to better understand the market, we classify residential properties into two different categories which are apartments and secondly townhouses & villas. As discussed earlier, there are a variety of parameters that contribute towards prices of the property, however at the macro level Price per Square Feet is undoubtedly the first parameter that experts take into account to understand the market dynamics. Unlike the ticket price of the property which normally end-users and investors look at, the price per square feet has proven to be more effective in understanding the market sentiments.

The price per square feet in apartments in general all across Dubai usually ranges at about AED 1,200 per square feet at an average of past 5 years. Taking this as a par value the overall average price per sqft which was around AED 1,107 /sqft in 2020 has substantially moved to AED 1,460/sqft in apartments as we speak today in 2022. This 30% increase in capital appreciation is HUGE in a mature market like Dubai, whereas the appreciation amongst other top cities have barely reached the 20% market post pandemic.

These apartment prices can be further analyzed as prime areas and non-prime areas where the price varies substantially. Comparing the statistics of prime areas where the prices were around AED 1,500/sqft in 2020 have now jumped to AED 2,200/sqft at an average. Similarly, the prices of non-prime areas where the prices were struggling to reach AED 800/sqft are now selling out above AED 1,000/sqft. When crunching down numbers, these classifications can further be categorized into offplan and ready developments where ready developments usually have 10 to 15% higher pricing than offplan, making room for offplan investments to grow with time.

When it comes to Townhouses and villas the pricing index show a similar story in Dubai Real Estate market as well. The average pricing of townhouses and villas was about AED 676/sqft in 2020 wherein the real estate market globally had experienced a setback. The average price per square feet of this category when taken 5 years historical medium stands at just below AED 800/sqft which was reached quickly within 1 year of hitting the bottom low. Very interesting the growth rate of pricing in villas and townhouses have more substantially increased than any other category which is now transacting at about AED 936/sqft which is above 40% increase making it a much more lucrative investment than any other medium in the world or even global real estate for that matter.

Collectively, the pricing of Dubai Real Estate market has been on the rise ever since the Greatest Show in the World was hosted in Dubai, and the city demonstrated its exceptional capabilities to the world and high potential to grow. The rising demand of this amazing city is evident of its great future and the increasing property prices are surely a true indicator of the trust that global investors and its residents have put forth on Dubai.

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