The surge in remote work and the resulting demand for larger living spaces contributed to a 4.2% rise in capital values in Dubai. The city is among 30 major global hubs that experienced positive growth in prime residential property values during the first half of 2021, according to a report by a leading global real estate advisor. This marks the fastest growth rate since December 2016, as the resilience of residential property markets worldwide remained strong through the first half of the year.

In addition to Dubai, cities such as Cape Town, Moscow, and Lisbon saw similar trends. Transaction volumes have also increased compared to the first half of 2020, when many cities were under strict lockdowns.

Dubai’s effective pandemic response and proactive economic policies have been key in boosting demand for prime residential properties, according to Savills’ World Cities Index report. Across the 30 cities tracked, capital values for prime properties grew by 3.9% over the six months ending in June 2021.

From June 2018 to December 2020, capital value growth across cities averaged only 0.7%, largely due to tax policy changes and global uncertainty. The pandemic exacerbated this slow growth, with many properties remaining closed during lockdowns.

Not all cities performed equally over this period. More than 70% of the cities reported positive growth, while those heavily dependent on international buyers saw declines due to travel restrictions.

Chinese cities led the way in capital value growth, with increases ranging from 7.9% in Guangzhou to 13.7% in Shanghai. Despite tighter financing and policy measures to cool the market, property prices in China have continued to rise, driven by buyer confidence in real estate as a secure investment.

While nearly 70% of cities affected by the pandemic saw positive capital value growth, those reliant on international buyers experienced declines due to travel restrictions. However, Savills predicts that the return of international travel will likely boost demand for prime properties.

Swapnil Pillai, associate director of research at Savills Middle East, expects that the UAE’s strong vaccination rates and economic recovery will further support buyer confidence and increase demand for prime residential properties, despite ongoing uncertainty from the pandemic.

The report highlights that a combination of quality stock, low lending rates, and relatively affordable prices drove strong transaction activity, which in turn pushed capital values higher for prime properties.

In the US, Los Angeles and Miami saw growth exceeding 9% in the first half of 2021. Meanwhile, Hong Kong, the most expensive city in the index, saw a 1.9% increase in capital values after price declines from 2019 to mid-2020 due to regional uncertainty.

London also saw a 1.1% increase in the first half of 2021 after six years of declining values, signaling improved market conditions. Cities such as Singapore, Bangkok, and Kuala Lumpur saw price recoveries due to increased demand and limited supply.