Dubai property market still benefiting from Arab Spring, Euro and Cypriot crisis

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Property company Asteco Q1 2013 Dubai real estate report reveals increased demand is pushing Dubai real estate prices up further

Interiors of a typical ready to move in Villa in Dubai. According to Asteco property's latest research, average apartment and villa rents in Dubai grew by 19 and 21% respectively over the past 12 months. Photo- DHV
Interior of a typical ready-to-occupy Villa in Dubai. According to Asteco property’s latest research, average apartment and villa rents in Dubai grew by 19 and 21% respectively over the past 12 months. Photo- DHV

All residential developments in Dubai, especially those with quality buildings or those in prime areas, have continued where they ended 2012 with a strong Q1 2013 performance.

Apartment sale prices grew on average by 12% in the three months to the end of March 2013, standing at 27% year-on-year growth. In comparison, although average villa sales prices only climbed 5% in Q1 2013, growth averaged 24% over the past 12 months.

The performance of rental rates was also impressive, average apartment and villa rents grew by 3 and 4% compared to Q4 2012, but still managed to climb 19 and 21% respectively over the past year.

“The overall outlook is positive with demand and rates expected to continue to grow. However, this will also mean that some tenants and buyers will be priced-out of certain buildings or communities.

Prices are not only being driven by tenants relocating, Dubai is also attracting new tenants and those expatriates here are still tending to take a longer-term view of living in Dubai.” — John Stevens, Managing Director, Asteco Property Management.

The areas that came out on top for villa sales in Q1 2013 were the Meadows which jumped 10% reaching Dhs11,850 per square metre; Jumeirah Islands which rose 9% achieving Dhs13,450 per square metre and the Jumeirah Village which also grew 9% to Dhs6,450 per square metre. Year-on-year villa sales in the Springs grew by 29% to Dhs 9,700 per square metre and the Palm Jumeirah remains the most expensive at Dhs20,450 per square metre.

In terms of apartment sales the top performer in Q1 2013 was Discovery Gardens which increased by 33% to Dhs6,450 per square metre. The only other double-digit growth was recorded in Dubai Marina and Jumeirah Beach Residence, where rates grew 14 and 15% respectively to Dhs12,900 and Dhs12,400. Over the past 12 months once again Discovery Gardens was the top achiever climbing an impressive 50% and again the Palm Jumeirah is the most expensive area with property commanding Dhs16,150 per square metre compared with apartments in DIFC and Downtown Dubai, which now change hands for Dhs15,600 and 15,000 per square metre respectively. The Palm Jumeirah remains the most expensive area, with a three-bedroom villa now costing Dhs325,000 per annum.

“In terms of supply and demand, Dubai is still benefiting from the Arab Spring and the Euro crisis, which was brought into sharper focus recently with the Cypriot banking crisis. Good quality stock is gradually being reduced while the length of time that advertised units stay on the market now is also shortening.” John Stevens

Apartment rental rates grew most during Q1 2013 in International City where a two-bedroom unit increased by 8% to Dhs40,000, while most other areas recorded up to 3% growth. On an annual basis, a two-bedroom unit in Discovery Gardens now leases for Dhs70,000 — a 27% increase. Downtown Dubai and Dubai Marina followed, notching-up increases of 21 and 22% respectively. A two-bedroom apartment rents for between Dhs100,000 and Dhs125,000, in these developments .

Although the commercial market saw little movement during 2012, in Q1 2013, it did show some signs of life. Rental rates in Dubai Investments Park rose 13% to Dhs485 per square metre, while JLT and Tecom rose 20 and 25% respectively to command Dhs654 to Dhs800 per square metre compared to the same period last year. DIFC remains the premium destination for office rental with Dhs2,400 per square foot. Q1 2013 office sales prices grew most notably in JLT (9%) and (7%) for Business Bay.

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