The price of secondary market properties in some developments in Dubai are increasing, giving hope that a recovery could be on the cards for 2010.
According to real estate firms prices of villas in particular are soaring because of demand and because they offer a better return on investment than apartments.
Property firm Asteco is reporting increases of 11 to 13% at the Springs since the beginning of this year and prices in the Meadows have surged between 16 and 19%.
‘Prices in the Springs and the Meadows have seen a quarter-on-quarter steep fluctuation owing to market conditions. It would seem that prices are trying to find stability in these developments and their current levels are trying to catch up with the third to fourth quarter prices of last year,’ said Vineet Kumar, Head of Sales.
Other estate agents are also reporting recent rises. ‘Prices appear to have stabilised in the Springs and the Meadows largely due to an increase in demand,’ said Mohanad Alwadiya, Director, Harbor Real Estate.
‘The residential market is currently being driven by a flight to affordable assets. The mid- to low-income earners, who were previously excluded from the market due to high prices, are now taking advantage of the new levels of affordability,’ he added.
Prices in these developments are still between 35 and 50% lower than the peaks of 2008 but it is the stability that prompts an optimistic outlook, according to analysts. Indeed the latest Dubai House Price Index from Colliers shows that real estate prices in Dubai have risen almost 7% in the third quarter of this year from the previous quarter.
‘The results indicate a bounce in the market and are an indication of an excellent recovery. With a host of projects due launch along with the opening of a new airport, Dubai has plenty on its plate to silence the critics and welcome its investors,’ said Tej Kohli, real estate investor and founder of Ozone Real Estate.
He added that stability in real estate prices is set to be steady from this point on and points out that a number of iconic projects will open in 2010 including The Conrad Hotel Dubai, a second Ritz Carlton, the Palazzo Versace Resort, the five-star Royal Amwaj Resort and Spa, and Tiger Woods’ Al Ruwaya golf resort.
‘The slew of launches goes to show that Dubai is well on track and with global visitor numbers up 4% for the first half of 2009 compared to the same period last year,’ added Kohli.