The residential real estate market in Dubai, UAE, is still considered ‘affordable’ when compared with many global cities, according to a new report which lists Hong Kong as the world’s most expensive residential location.

London is the world’s second highest value location according to average price per square foot.

The Global Living Report by CBRE said that in London, prime property comes in at $3,000 psf, compared to $1,300 psf at the very top end of the market in Dubai. Low import taxes make it easier to source high-quality material in Dubai, as opposed to London. Furthermore, the cost and access to labour differs considerably between UAE and other European and international cities. Scarcity is another factor: land is difficult to come by in Paris, London, New York and Barcelona. Another factor is the on-going construction in Dubai; there are still many opportunities to infill, it said.

The Global Living Report provides a snapshot of 31 global cities, showcasing the differing influences in each city and providing a comparative study of house prices, rental growth and living costs, among other factors.

Safina Ahmad, head of residential, CBRE Mena, said: “A significant factor affecting property prices is global currency fluctuations. The markets pegged to the dollar, and also the relatively strong UK sterling are looking comparatively more expensive. Conversely a competitive euro has opened up markets like France and Spain in mainland Europe.

“Where recent growth has been particularly marked, investors are now expecting either slower or negative growth. Average growth in London and Dubai for example, as well as a number of other international markets, have hit double digit highs for at least two years prior to 2014. We’re now witnessing a market correction and more modest growth with small pockets of localized decline.”

The top 10 highest value locations
1. Hong Kong - $1,377psf
2. London    - $996 psf
3. New York - $819 psf
4. Paris - $795 psf
5. Singapore - $787 psf
6. Tokyo - $678 psf
7. Los Angeles - $652 psf
8. Milan - $529 psf
9. Rome - $509 psf
10. Edinburgh - $497 psf

Jennet Siebrits, head of residential research at CBRE, said: “As the global population continues to expand and new innovations impact the property market, we are witnessing a move towards greater integration between our cities. What our research has found however, is that global cities are retaining what makes them unique whilst sharing valuable knowledge and experience that can enhance other cities around the world.

“Using the advantage of CBRE’s unique position as a global property company, we have witnessed some unexpected findings in the Global Living Report, such as in Dublin, where house price growth was at a global high of 22 per cent, and in Moscow, which has the highest proportion of owner occupiers in our sample.

“In Europe, we report how the central London residential market has rebounded at a significant rate, with average house price increases of 86 per cent since 2009. In the Outer London market we have witnessed a slower growth of 63 per cent during the same period, demonstrating a divergence which is now narrowing, as overall prices in the UK’s capital reach 14.8 per cent in 2014 alone, offering investors significant growth prospects,” Siebrits said.

“With the continued population growth of about 5 per cent, there is a consistent demand for housing, particularly in the affordable space. The Mena region offers a large housing supply but it mainly sits in the luxury space targeting a more affluent buyer profile. We are faced with a smaller pool of non-resident buyers as they have responded well to mainland European markets which have recently opened up in light of an attractive euro, for example, Marbella has seen significant interest from Saudi buyers,” commented Ahmad.

The 10 lowest value locations

1. Istanbul     - $109 psf
2. Johannesburg - $118 psf
3. Cape Town - $161 psf
4. Lisbon - $188 psf
5. Toronto - $215 psf
6. Chicago - $227 psf
7. Madrid  - $238 psf
8. Barcelona - $241 psf
9. Sydney - $250 psf
10. Bangkok - $255 psf

Commenting on the Mena region’s top cities, the report said Abu Dhabi’s population of 2,570,000 is expected to increase by 54 per cent over the next decade, adding an additional 1.38 million residents. The property market experienced 31 per cent growth in 2013 and 24 per cent growth in 2014, and has since taken on a more stable pace as a result of lower oil prices. The rental market is robust, with 12 per cent growth over the last year taking values to $2,574 per month.

It said the promise of an opulent lifestyle and tax-free salaries has created a large expat community in Dubai, with 92 per cent of the population made up of expats and migrant workers. A buoyant market saw 22,989 transactions last year, 28 per cent higher than the 10-year average. A trend of large quantities of new developments is expected to continue, with 25,000 new units built on average each year.

Istanbul, the fifth largest city in the world, is seen as a strong investment opportunity. Last year the city enjoyed 15 per cent annual house price growth and the rental market experienced similar growth of 12 per cent in rents. Istanbul has the lowest average property price in the sample at US$109 psf. – TradeArabia News Service