Dubai is experiencing a mini property boom with sales and prices rising every month for over a year now but they are still some way below the peak of the market in 2008. Residential property sales prices are about 18% higher in the first quarter of 2013 compared to the year earlier period, according to the latest report from Jones Lang LaSalle.
Apartment prices were up 18% and villa prices up by 17% according to the REIDIN general Residential Sale Index but both are below peak values by 22% and 8% respectively. Rent prices are also rising with the REIDIN Rental Indices showing a rise of 10% year on year. Jones Lang LaSalle said rentals have increased in the most sought after areas such as Burj Downtown, Dubai Marina and Palm Jumeirah, while remaining stable in secondary and less completed locations.
‘While well established residential communities in central Dubai are expected to see further price and rental growth over the rest of 2013, less completed projects in more remote areas will need more time before seeing increased demand and performance,’ said the report. ‘For some months now, we have seen sustained confidence in the Dubai real estate market, although it remains selective with the best performance focused on high quality assets in prime locations,’ said Alan Robertson, chief executive officer of Jones Lang LaSalle, Middle East and North Africa.
Some experts have voiced concerns that a mini property boom could be bad for the real estate market but others point out that the markets are more mature than they were when they collapsed in 2008 leading to prices in some locations falling by up to 60%. ‘An initial glance might suggest that many of the conditions that led to the unsustainable growth in real estate prices in Dubai in 2006 and 2007 have returned. However, there are important differences as the Dubai market has matured. The excesses of the last speculative boom will hopefully be replaced by a period of slower but more sustained growth in demand and prices,’ explained Robertson.
Quote from PropertyCommunity.com : “Properties in the best locations in Dubai saw prices rising by up to 30% last year, especially villas, according to the latest annual real estate report from Hamptons MENA.”
‘The challenge is to ensure that this confidence does not lead to undue exuberance. If the market has learnt anything from the past decade, it is that an extended period of sustained growth is far more beneficial than a short period of unsustainable growth followed by an inevitable crash,’ he added.
The Dubai residential market has experienced further increases on the back of rising demand from relocations as well as new tenants, according to the 2013 first quarter report from Asteco. It shows that apartment and villa rents rose by 3 and 4% compared to the fourth quarter of last year whilst year on year growth amounted to 19 and 21% respectively. Sales prices fared even better with quarterly increases of 12 and 5% for apartments and villas, and an annual growth of 27 and 24%.
‘The overall outlook is positive with demand and rates expected to continue to grow. However, this will also mean tenants and buyers will be priced out of certain buildings or communities,’ the report said.