Dubai property soars, but way below 2008 peak
Dubai, October 1, 2013
Dubai property sales and rental prices registered solid growth over the past 12 months and is poised for further rise, but the prices are unlikely to hit the 2008 peaks in short to mid-term, said a report.
The rentals are lagging 38 per cent and 31 per cent for apartments and villas respectively over the same period, according to leading property expert Asteco.
Although prices will increase further, it is unlikely that they will hit their 2008 peaks in the short to mid-term, the Asteco said in its third quarter 2013 report for Dubai.
According to Asteco, the villa and apartment sales prices in the emirate soared year-on-year by 26 per cent and 42 per cent respectively, but are still 42 per cent lower than third quarter 2008, it added.
To be distributed at the Cityscape exhibition next week, the special Asteco report highlights the fundamentals that have been driving the Dubai market.
Political stability, trade links, a buoyant and diversified economy, regulatory infrastructure and an attractive tax environment have all contributed towards a resurgence in transactional activity over the past 12 months, which has led to a significant appreciation in sales, rental prices, said the report.
On the residential sales prices, John Stevens, the Asteco managing director, said, “While we have seen numerous project launches and increased interest in buying off-plan properties, projects with favourable payment plans in good locations saw the bulk of demand.”
The best performing areas for apartment sales prices over the past year were Discovery Gardens, up 75 per cent to Dh700 per square foot, and Jumeirah Lakes Towers up 46 per cent to Dh950 per square foot.
In terms of 2008-2013 performance, Jumeirah Beach Residences and The Greens are 32 per cent and 33 per cent respectively below their 2008 peaks. On average, the most expensive area to buy an apartment in Dubai at the moment is Downtown Dubai, at Dh1,700 per sq ft.
In terms of villas, over the last 12 months Jumeirah Village was the standout performer increasing by 50 per cent to Dh750 per square foot, followed by Jumeirah Islands (over 30 per cent to Dh1,300 per sq ft) and Springs (over 25 per cent to Dh1,000 per sq ft), said Stevens.
Still one of the most exclusive locations for villa owners is Palm Jumeirah, commanding Dh2,000 per sq ft, over Dh700 per sq ft more than Jumeirah Islands and almost double that of any other freehold area in Dubai.
"Almost in parallel with the sales market, apartment and villa rents are still below third quarter 2008 levels by 38 per cent and 31 per cent respectively," he added.
However, said Stevens, recovery is well underway with a year-on-year average rental growth of 23 per cent for apartments and 19 per cent for villas. "We expect rental growth to continue as economic improvements fuel internal demand as well as result in new arrivals," he added.
Given its initially low rates, International City outperformed the market over the past 12 months with a 35 per cent increase. A one-bedroom apartment now costs Dh32,500 per annum. Downtown Dubai is just 25 per cent below its 2008 peak, with a two-bedroom apartment now renting for Dh140,000 per annum.
Palm Jumeirah remains the most expensive out of the areas surveyed, where a two-bedroom apartment rents for Dh160,000 per annum on average.
Villa rentals in The Springs fared best over the past year, recording a 34 per cent increase to Dh165,000 per annum for a three-bedroom house, with villas of the same size in Mirdiff increasing 31 per cent to Dh120,000 per annum. The Palm Jumeirah is still one of the most expensive places to rent a three-bedroom villa at Dh350,000, which is just 10 per cent below its 2008 peak.
On the office sector, Stevens said the sales prices have seen little improvement over the last five years and are still 63 per cent lower than in third quarter of 2008 while the last 12 months only saw minimal increases of 8 per cent on average.
"However, despite rental rates 66 per cent lower than in third quarter 2008, the office market has outperformed residential over the past year, rising 43 per cent, albeit from a low base," he added.-TradeArabia News Service