DUBAI - For the first time since the pandemic, the rise in residential property prices in Dubai has extended to the economy property market, according to ValuStrat's second quarter estimates.

The real estate valuation and advisory services firm said it found significant price increases in The Gardens, Motor City, Greenfield and Production City.

In the aftermath of the epidemic, a large influx of high net worth individuals (mainly from India, Europe, Russia and other Asian countries) into the country due to safety, quality of life and a world-class healthcare system drove up local real estate prices. In the last two years, prices in high-end areas have more than doubled and unit prices have hit record highs.

"In an intriguing turn of events, the affordable housing market has seen significant capital gains for the first time since the pandemic," said Haider Tuaima, Director and Head of Real Estate Research at ValuStrat; "Significant quarterly growth has been seen in lower priced and higher yielding areas such as Discovery Gardens (4.5%), Motor City (4.3%), The Greens (3.9%) and Dubai Production City (3.4%).

According to Redseer Strategy Consultants, the long-term growth of the local real estate market is driven by three main factors - affordable real estate investment, rising residential rents and government deregulation.

"The government has implemented initiatives to stimulate growth and attract expatriates, such as allowing full company ownership without a local guarantor and introducing post-retirement visas for expatriates. These initiatives have boosted the confidence and intention of residents to purchase property in the UAE, which will propel the sector towards longer-term growth," the consultancy said in a note on real estate in the UAE.

The study attributed the boom in the UAE real estate market to Russian expatriates and local buyers." In the short term, Russian expats are driving the market, while in the long term, local buyers will drive growth," the study said.

According to ValuStrat, off-plan sales volumes fell for the first time this year quarter, most likely due to a relatively quiet selling season during Ramadan and the two Eid holidays.

While off-plan sales were up 75.7% year-on-year, on a quarterly basis they were 10.6% below their record high in the first quarter of the year. However, existing home sales transactions set a new record in the second quarter, up 11.8% year-on-year and 9.3% quarter-on-quarter.