Multiple neighborhoods in Dubai saw annual home price growth—in some cases for the first time since 2014—in the first quarter of this year, according to a report from Knight Frank on Tuesday.
Eight out of the 54 communities tracked by Property Monitor—which provided market data for Knight Frank’s report—saw either stable sales prices or price increases. A few luxury neighborhoods in the Middle Eastern financial hub saw significant price growth compared to the mainstream market following years of declining prices throughout the city. The positive performance of a few markets underscores the fragmentation between established areas with few new off-plan developments and areas like Downtown Dubai, which continues to suffer from oversupply.
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The Palm Jumeirah, a palm-shaped artificial island that encompasses five-star hotels, lavish villas and low-rise apartments, recorded a 1.2% increase in home prices in the year through March, according to Knight Frank.
Meanwhile, values in the Lakes, a community of villas set around two golf courses and a hub for wealthy expatriates and their families, have risen 2.6%.
As Dubai’s submarkets diverge in terms of market performance, wrote Knight Frank senior analyst Taimur Khan in the report, "we anticipate that pricing in mature communities, which are rich in amenities and offer good connectivity, are likely to be impacted the least because of this."
Overall prime prices across the city fell an average of 5.48% in the year to March, an improvement over the first quarter of 2017, when annual prices fell nearly 10%. Luxury also outperformed the mainstream market, where prices decreased 6.74% during the timeframe.
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Despite improvement in some quarters of the city, its softest luxury neighborhoods continue to drag down the average, as sellers and developers are forced to recalibrate prices amid the deluge of new construction.
Prices in Emirates Hills, another pre-planned gated community of luxury villas, fell 12.2% in the year through March, according to Knight Frank. Price declines in Downtown, home to the towering Burj Khalifa, improved over 2017 but were still down 5.2%.
"There is a considerable amount of supply scheduled to enter the market this year," Mr. Khan wrote. "If this supply is delivered on schedule we are likely to see prices continue to soften."