Residential and commercial developments in Dubai, have recorded another robust performance in Q2, the fourth consecutive quarter of leasing and sales growth particularly in the residential sector.
Apartment sales prices grew on average by 12% in the three months to the end of June 2013 with year-on-year growth standing at a remarkable 38%. In comparison, although average villa sales prices climbed a respectable 8% in Q2 2013, growth over the past 12 months averaged 24%.
The performance of rental rates was equally impressive, average apartment and villa rents grew by 7% and 6% compared to Q1 2013 and managed to climb 20% and 17% respectively over the past 12 months.
“H2 2013 has not witnessed any slowdown in transaction volumes, leasing or sales growth, while new project launches have become a weekly occurrence,” said John Stevens, Managing Director, Asteco Property Management.
A significant number of buyers in Q2 2013 came from the sub-continent and areas affected by regional turmoil, with investors outweighing end users. Also, improved mortgage availability and increased market confidence stimulated sales growth, says the report.
In terms of apartment sales the top performer in Q2 2013 was Discovery Gardens which increased by 17% to AED 7,550 per square metre, taking its performance over the last year to 75%. The Greens recorded 15% sales growth in Q2 reaching AED 12,400 per square metre, taking its annual increase to 44%. Downtown Dubai, which witnessed an increase of 18% in Q2 (38% year-on-year) remains the most expensive area in Dubai to buy an apartment at 17,750 per square metre.
The best performing areas for villa sales in Q2 2013 were Jumeirah Village which rose 25% in Q2 to reach AED8,100 per square metre, a 40% increase over the past 12 months. The Springs also recorded 11% growth in Q2 reaching AED10,750 per square metre, a 25% annual growth rate and Arabian Ranches returned equally impressive increases of 10% in Q2, 19% year-on-year with properties now selling at AED11,850 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 during Q2 2013 in International City where the annual rental rate for a two-bedroom unit increased by 11% to AED 42,500 a 27% year-on-year increase. Dubai Marina recorded an 8% growth (20% year-on-year) where a two-bedroom apartment now leases for AED110,000 per year on average.
The Springs and the Meadows were the top performers for villa rental rates in Q2 2013, recording 10% and 8% increases respectively over the last three months. A three-bedroom villa in The Springs now leases for AED160,00 per annum, and the same unit type leases for AED240,000 in the Meadows. Average year-on-year rental increases stood at 35% and 17% respectively.
“As rental demand increases and rates rise, some residents will be priced out of established communities into less developed, more affordable areas. Some may even decide to relocate to more budget-friendly neighbouring emirates,” said Stevens.
After showing some signs of confidence in Q1, the commercial market saw continued growth in Q2 2013. Rental rates in Jumeirah Lake Towers (JLT) grew exponentially, recording a 75% increase to AED1,125 per square metre, which represents a 110% year-on-year increase.
Dubai Investments Park rose 33% to AED 650 per square metre, a 50% year-on-year increase. Business Bay rose 27% in Q2, a 36% annual increase at AED1,025 per square metre. Q2 2013 office sales prices grew most notably in JLT (17%) and Dubai Silicon Oasis (11%) compared to Q1 2013.