The average cost of an apartment in Dubai increased 12 percent in the first three months of the year as demand for real estate in the emirate increased in prime locations, according to a new report.
Average apartment prices rose 27 percent year-on-year compared to 21 percent for villas, Asteco said in its quarterly report.
“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,” John Stevens, managing director of Asteco said.
“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,” he added.
Dubai, which saw real estate prices decline by over 60 percent during the economic downturn, has witnessed a gradual recovery in its property market, largely buoyed by a the return of speculative buyers to the residential segment.
Average apartment and villa rentals increased 3 and 4 percent respectively in the first quarter of this year, representing a 19 and 20 percent rise year-on-year, Asteco said. Apartments in Downtown Dubai and Dubai Marina saw some of the biggest price increases, rising 21 and 22 percent, respectively, with an average two-bedroom apartment in both areas commanding around AED100,000-AED125,000 (US$27,000 - US$34,000) per annum.
Villas in Emaar’s Meadows project saw the biggest rise in purchase price, increasing 10 percent to AED11,850 per sqm in the first three months of the year, just ahead of property in Jumeirah Islands and Jumeirah Village, which both increased 9 percent.
Apartments in Discovery Gardens saw the most substantial increase in asking price, rising 33 percent to AED6,450 per sqm during the first three months of the year. The only other double digit growth was seen in Dubai Marina and Jumeirah Beach Residence, which increased 14 and 15 percent, respectively, to AED12,900 and AED12,400.
“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,” said Stevens.