Dubai: Increased real estate transactions may signal economic recovery
British and Indian buyers dominated Dubai's villa and land market in 2011, but GCC nationals were the biggest investors in the apartment sector, government data show.
Dubai's Land Department, which issued its annual report yesterday, claims that a 20 percent increase in property transactions in 2011 — at a value of Dh143 billion — is a sign of real estate market recovery and growth.
"The transactions' quantity, quality and procedures reflect the recovery and growth of the real estate market in Dubai," said Sultan Butti Bin Mejren, Director General of the Land Department.
The department's transactions for 2011 reached 35,297, including sales, mortgages, ijarah (online registration fee), mortgage portfolios, deferred sales and other transactions.
A 12 percent increase in mortgages was recorded in 2011 over 2010, and mortgages represented 60 percent of the transactions conducted in 2011. This indicates the recovery of property financing, Bin Mejren added.
Muhannad Al Wadiya, managing director of Harbor Real Estate, said that the real estate sector in Dubai is witnessing positive sentiment. "Moreover, 90 percent of the developers are back to the market, and in the next five years they will be completing their projects," he said. He added that challenges remain, including confidence and access to liquidity, but rental returns were stable.
"The rental returns in some areas of Dubai were estimated to be between 5 and 7 percent in 2011 and it will continue the same this year," Al Wadiya said. He said he was expecting a 10 to 15 percent drop in office rents in the coming three years because of oversupply. "The demand for villas is high as there is limited supply. That is why prices have jumped."
Bin Mejren said that the value of transactions reflects the return of the real estate market to normal levels, the exit of speculators, the maturity of the real estate market and increased investor awareness. "This demonstrates the ability of Dubai to fully recover from the challenges of the international crisis and prove once again the strength of Dubai's economy," he said.
Bin Mejren stressed that the market saw a state of stability and increased demand from investors in buying properties and grasp investment opportunities in the last two years.
Deals worth billions
- According to the Land Department figures, the heaviest investment was in apartments through sales and mortgages, accounting for 26,465 transactions worth Dh43 billion.
- Sales of land totalled 2,961 transactions at a value of Dh22 billion.
- Mortgage transactions amounted to 3,315 worth Dh69 billion.