Dubai real estate continues to outperform expectations
Dubai skyline (Source: Wikimedia Commons)
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The upswing in Dubai property prices continued unabated along with a steady surge in rents in the first half of 2013 as more buyers from turmoil-hit countries entered the market amid increased investor confidence and mortgage availability.
Year-on-year apartment rents and sales prices jumped 20 per cent and 38 per cent respectively. Villa rents were up 17 per cent as sales surged 24 per cent, according to Asteco’s first-half 2013 report.
“Residential and commercial developments in Dubai have recorded another robust performance in the second quarter, the fourth consecutive quarter of leasing and sales growth particularly in the residential sector,” the report said.
Apartment sales prices grew on average by 12 per cent in the three months to the end of June 2013 with year-on-year growth standing at a remarkable 38 per cent. In comparison, although average villa sales prices climbed a respectable eight per cent in the second quarter, growth over the past 12 months averaged 24 per cent.
In the first quarter, Dubai recorded 18.3 per cent surge in luxury home prices to rank among the top four in “Prime Global Cities Index” as prime property prices across the world fell by 0.4 per cent, a recent research note by Knight Frank, a leading independent global property consultancy, said.
A recent research by Global Investment House shows that property markets of the UAE and Saudi Arabia continued to lead the recovery in GCC’s real estate sector, while Kuwait recorded a gradual upturn in the first quarter. Dubai’s real estate market outperformed that of other markets in the UAE with rental rates in the residential sector recording a 10 per cent rise.
According to Asteco, the performance of Dubai rental rates was equally impressive, average apartment and villa rents grew by seven and six per cent compared to first quarter and managed to climb 20 per cent and 17 per cent respectively over the past 12 months.
John Stevens, managing director, Asteco Property Management, said the first half had not witnessed any slowdown in transaction volumes, leasing or sales growth, while new project launches have become a weekly occurrence.
“A significant number of buyers came from the sub-continent and areas affected by regional turmoil in second quarter, with investors outweighing end users. Also, improved mortgage availability and increased market confidence stimulated sales growth,” Asteco's report said.
In apartment sales, the top performer was Discovery Gardens, which increased by 17 per cent to Dh7,550 ($4,819) per square metre, taking its performance over the last year to 75 per cent. The Greens recorded 15 per cent sales growth in second quarter reaching Dh12,400 ($3,405) per square metre, taking its annual increase to 44 per cent. Downtown Dubai, which witnessed an increase of 18 per remains the most expensive area in Dubai to buy an apartment at Dh17,750 ($4,874) per square metre.
The best performing areas for villa sales were Jumeirah Village, which rose 25 per cent to reach Dh8,100 ($2,224) per square metre. The Springs also recorded 11 per cent growth reaching Dh10,750 ($2,952) per square metre and Arabian Ranches returned equally impressive increases of 10 per cent with properties now selling at Dh11,850 ($3,254) per square metre.
“Sales prices should continue to rise as market confidence picks-up in parallel with the improving economy, particularly for villas from aspiring owner-occupiers, that want to jump on to the property ladder,” said Stevens.
Apartment rental rates grew most in International City where the annual rental rate for a two-bedroom unit increased by 11 per cent to Dh42,500 ($11,671). Dubai Marina recorded an eight per cent growth where a two-bedroom apartment now leases for Dh110,000 ($30,208) per year on average.
The Springs and the Meadows were the top performers for villa rental rates, recording 10 per cent and eight per cent increases respectively over the last three months. A three-bedroom villa in The Springs now leases for Dh160,000 ($43,939) per annum, and the same unit type leases for Dh240,000 ($65,908) in the Meadows.
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