Dubai property market 'back on its feet'
2013 has been the year of positivity for Dubai property sector where not only did it experience jumps in prices, but it also eventually ended up bagging the honour of hosting Expo 2020, according to a report.
With Dubai benefiting from the Arab Spring, creating more job opportunities, taking measures to boost investor’s confidence and registering sale and rental price hikes, 2013 was nothing short of a happening year for the local property market, said Dubai-based property portal Bayut.com.
It was not too long ago that Dubai was more of a buyer's market. In 2013, not only did it transform into a seller's market, but the escalating rental prices also forced tenants to move to secondary and less posh areas, it stated.
While this shift might have been a little hard to stomach for the tenants, for Dubai, however, it brought along a more profound, broader based recovery. As per Bayut.com’s stats, property sale prices rose by 42.9 per cent in Dubai during 2013.
This shift in focus, in some areas, caused the hike in prices to slow down in Dubai while for other areas, it resulted in sharper rises. Because of the same trend, there were a few areas which underwent a correction and recorded minute falls in prices.
For the first nine months in 2013, the total transaction value crossed Dh162 billion ($45 billion), which was a clear indicator of a lot of genuine buying and selling in the market.
Such high demand pushed property prices up rather sharply, pointed out Bayut.com.
The sharp rises elicited warnings from the IMF, which continuously hinted at the possibility of the market becoming overheated too soon. Such warnings, amongst many other things, had a positive impact on the market in the sense that it encouraged the government to take steps to work on averting any possible crisis.
To curb this, Dubai government doubled the transfer fee from 2 to 4 per cent. Despite the warnings and rumours of a bubble, Cluttons is of the view that there is nothing to worry about because there is a strong demand for property in the market.
Focus is now shifting from primary to secondary market in Dubai
Rising prices have forced some buyers to give up the idea of looking for units in primary areas. Because of this, there seems to be a shift in the trend in the favour of secondary areas like JLT which thus exhibited sharper price hikes in 2013, showing a 25.58 per cent increase in the sale prices of apartments as per Bayut.com's stats.
Dubai Marina continued to boast of steady sale and rental prices throughout the year, except for a few, very minute falls here and there.
The same can be said about Downtown Dubai, where the sale price of studio & 1-3 bedroom apartments registered steady hikes of 15.17 per cent in their sale prices during 2013. The Expo 2020 win also played its part in steadying the prices towards the end of the year, said the property portal.
Things could take a turn for the better for the locality in 2014 as per the prediction of Abdul Kadir Faizal, CEO ERE Homes, who believes primary developments, including Palm Jumeirah, Dubai Marina, Downtown Dubai, Emirates Living and Jumeirah Park, would be favoured by buyers and/or investors this year.
Palm Jumeirah had a good 2013 since almost all apartment units there exhibited healthy spikes throughout the year, registering an overall spike of 27.54 per cent in their sale prices. The sharpest rise was seen in the sale prices of studio apartments for which prices jumped from Dh923,410 at the start of January 2013 to Dh1,365,532 towards the end of December during the same year.
Even though there were some major fluctuations in the sale prices of property in different areas in Dubai, but for the rental prices, there were many steady hikes across all popular areas including Downtown Dubai, where the rental trajectory seemed to favour 1 & 2-bedroom apartments both of which showed a percentage increase of 16.75 per cent and 14.64 per cent respectively during 2013.
Interestingly, the rental prices in JLT showed sharp rises because of the higher demand from tenants who no longer afford units in primary locations and seem to prefer JLT over other secondary locations because of its proximity to Dubai Marina.
Because of that reason the rental price of 2-bedroom units climbed from Dh101,030 at the beginning of January 2013 to Dh136,920 by the end of December in the same year, stated Bayut.com in its report.
In contrast to the rental spikes in JLT, apartment units in Dubai Marina only managed to register an 8.41 per cent rise in their rental prices which could be because of the shifting trends.
It is interesting to note that rental prices recorded for studio, 1 & 2-bedroom apartments in JLT at the end of 2013 were still lower than the rents exhibited by the same sort of apartments in Dubai Marina at the start of the year.
Overall speaking, both the sale and rental market in Dubai performed exceptionally well throughout 2013, the property portal added.
“Based on the performance of the property market in 2013, it can be said that 2014 could possibly be another promising year for the sector. The market is likely to benefit from its Expo 2020 win,” remarked Imran Ali Khan, the CEO of Bayut.com.
Knight Frank too has predicted that Dubai could become the top performing property market in 2014. Some experts are of the opinion that 2014 would be the year of sellers and landlords who would have more control over the market, whereas buyers and tenants will be left with little choice.
"What 2014 will bring for the property market of Dubai is a little hard to predict, however, one thing that can be said with surety is that Dubai market has gotten back on its feet and has indeed made a full comeback," stated Khan.
Winning the bid to host Expo 2020 is likely to have a positive impact on the market and it could help stabilize the sector for years to come," he added.
- Sorry Dubai: why London's pricy property is still number one for ME investors
- Hubris and greed: the toxic combination that drove the rise and fall of Arabtec?
- Narrowing things down: the cheapest and most expensive places to rent in Dubai
- Arabtec's nosedive: a case study for exactly what needs to change about Dubai
- The only way towards sustainability? Why Dubai's property market needs a rent-to-own option