Consumer confidence returns to the Dubai residential property market

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Cluttons in Dubai – Consumer confidence returns to the residential property market

• Confidence evident in pricing shifts as well as increased transactions
• Dubai property transactions grew 21% to AED 63 billion in the first half of 2012
• Apartments sale values in Dubai have increased on average 4.9% since Q1 2012
• Villa sales prices overall match prices of spring 2007

Dubai, UAE; 26 September 2012 – Cluttons, the real estate specialist which has enjoyed a dedicated Middle Eastern presence since 1976, today announces its Q3 market report for Dubai’s residential market 2012. The overall trend in the marketplace is positive with general price stability across the Emirate and some price rises noted in specific areas.

Apartments in Dubai have increased in value an average 4.9% since the beginning of 2012 and Cluttons predicts a continuation of this trend towards the end of the year. In addition, apartment rental values have increased 6.8% in Dubai. However, Cluttons does note that averages can be misleading, as there were areas in the Emirate did not see any growth.

Average sales for high-end villas rose from 1,100 AED per square foot in January to 1,300 AED per square foot in September 2012, whereas mid range villas have risen from 550 AED per square foot to 650 square foot in the same period. Mid range villas have also witnessed a rise in sales price from just under 750 AED per square foot in January to nearly 900 AED per square foot in September of this year. Cluttons notes that villa prices now match spring prices 2007.

According to the Dubai Land Department, Dubai property transactions grew 21% to AED 63 billion (US $17.15 billion) in the first half of 2012, compared to Q3 and Q4 2011. Cluttons can also confirm that internal valuation instructions for both villas and apartments have increased some 23% since Q4 2011 and 50% of these represent mortgages of new property acquisitions.

Cluttons has also found that a new factor has quickly begun to affect popularity and prices this past year, which is proximity to metro stations. The metro transport link has now established itself as a substantial variable, which drives an individual’s decision when short-listing property. The majority of areas close to the metro stations have maintained their demand and in most cases have increased in both capital and rental values.

Dubai’s strengthening property market is a reflection of the UAE’s improving economic performance. According to a recent Merrill Lynch Global Research Report, GCC 2020, Dubai’s diversification model has the right mix to accelerate growth. The report finds that Dubai’s superior infrastructure investment and robust population growth has established solid foundations for future economic growth. Dubai is widely viewed as a regional financial, transport and logistical hub, placing it in an excellent position to benefit from regional growth.

According to Dubai government published figures, foreign investors buying real estate were responsible for acquisitions of AED 28.3 billion (US $7.7 billion) in the first half of 2012, up 36% from the same period last year. In addition, trade license applications were up 9% in July 2012 compared to the same monthly period in 2011, according to the Department of Economic Development, giving a strong indication of improved business confidence in the Emirate.

Cluttons predicts that prices will remain relatively stable over the next 12 months, as the 24,000 residential units scheduled to be delivered in the second half of 2012 will bring a large stock of supply onto the market making huge price uplifts or a ‘boom’ scenario unlikely.

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