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Summer Sales Review – Palm Jumeirah – August 2022
By: Mark Towers on Aug 31, 2022 10:46:56 AM
So, it’s coming to the end of the month and as usual I check out all the sales in the market and compare to the previous year.
Dubai is such a vibrant and diverse property market that it would be impossible to compare everything, so for the sake of this article we will focus on Palm Jumeirah Villas as it makes for interesting reading.
Palm Jumeirah Villa prices affected by Macro events
Historically, the summer months have not been too active for villa sales on the Palm Jumeirah. It stands to reason that the people with this type of property are in a comfortable position and do not need to suffer the summer heat so often the Palm does feel considerably quieter in the summer.
Obviously, the current market situation is different with Macro events affecting the markets across the world.
The Russian – Ukraine war is the big one that affects Dubai as it is having an impact on short term migration into Dubai and also impacting oil prices whereby oil producing countries are benefitting from huge uplifts in the oil price.
Since February 24th Dubai has seen an influx of Russian, Ukraine and other Baltic state citizens all looking for a safe haven in these turbulent times.
The Russian choices of where to move in the world are very limited and Dubai has positioned itself beautifully enabling the Russian community to enter the country and as a result they have been investing heavily in real estate across the emirate.
Just this week Emirates Airlines announced they were increasing the weekly flights to Moscow from 14 to 17 and this could increase further.
This has been a positive result for Dubai for sure and we already knew that the Russian buyers love sea fronted property and yet again they have not disappointed.
There have been several properties sold in the past 4 weeks to Russian buyers and although privacy restricts us from being too specific we can confirm that Russians have bought in The One Palm, The Royal Atlantis and many villas ( both garden homes and signature villas) are being snapped up as soon as they come onto the market.
The price increases have been incredible and if you go back a couple of years to pre covid we can see that Palm Jumeirah villas for sale have more than doubled in value.
For example, we sold a K Frond garden home in March 2020 for AED8.5m. The same villa today is worth AED 20m. I have been selling Palm property for a long time and I really didn’t see this type of increase coming. That said I didn’t see a war coming either and without doubt the double whammy of covid and then the war has fuelled these extraordinary price rises.
Are these prices sustainable?
So, I suppose the big question is are these prices going to keep on rising? If you go out for brunch with 20 real estate brokers I guarantee that you will come away both drunk and convinced that the prices “are going to the moon”. The brokers will also tell you this when they are sober by the way so we can’t blame the Saffron Brunch at the Atlantis for their over exuberance.
As most of you know I’ve been here for 20 years and saw the first gold rush on the Palm Jumeirah between 2004 - 2008. Although we didn’t have crypto terminology in those days I distinctly remember the agents at Cityscape 2008 floating around convincing everyone that Dubai was immune to any world crash and all was good in this part of the world. What amazes me is that I think I believed we were immune then as well. Considering that Lehman brothers had already folded I can’t believe how naïve I was. I also thought that the vaccine would prevent me from getting Covid. It didn’t but I’m still alive.
It's not a popular narrative but I think it’s unlikely that the prices will keep rising. Maybe another 10% would be my guess but short of a miracle in the US economy it looks highly likely that we are heading for a world recession and to think we are immune would be again be naïve considering I fell for the last trap.
I am not saying that the market will collapse here but it will definitely be affected so we should be prepared.
Palm Jumeirah Villa Sales August 2022
Garden Homes are still having a good run with the traditional Nakheel ones achieving sales from AED 16,000,000 to AED 23,500,000.
There are quite a few sales in this range and certainly enough to assume that the demand is still high and the winter might see some more increases as Dubai gets busier.
Signature Villas are just as popular at the moment but there is always limited stock available and just 2 sales have been recorded at levels in the region of AED 35m . Both these villas were original and will probably be modernized now.
I really can’t name particular villas in this article but for a more in depth analysis of the market I am available for coffee in the Golden Mile any day of the week.
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