New Deutsche Bank report says prices still well below peaks seen back in 2008
Dubai real estate prices and rents rose for the 16th consecutive month in March, continuing the steady recovery in the sector, according to a new report by Deutsche Bank.
Property prices increased by 1.5 percent from February to March with price increases recorded across most areas, while prices and rental values remain significantly below their peak of 2008, the report said.
It added that apartment prices remain between 43-61 percent below peak with villa prices between 12-49 percent below. Rental values show similar trends, Deutsche Bank added.
The March figures take the year-to-date growth in property prices to over 6.2 percent, the report noted.
Despite this recovery, the shares of real estate developers trade at a discount to emerging markets and world developers, according to the report.
Deutsche Bank said the growth in prices and investor confidence continues despite increased supply.
Since the second half of 2011, Dubai has witnessed an increase in project launches by master developers such as Emaar, Nakheel and Damac.
Nakheel has restarted various projects while Emaar recently pre-sold four projects with over 1,000 units sold overnight with prime units selling at a 40 percent premium to market prices reflecting trends seen around the world.
Emaar has now announced another project in Downtown Dubai which went on sale this week.
Commenting in the report, research analyst Athmane Benzerroug said: "The price recovery that started in late 2011 in prime properties is now spreading to second tier communities.
"Despite new supply, investor confidence remains strong, while main master developers are accelerating project launches."
Despite the growing confidence in the market and the 1.9 percent increase in share prices seen in March, UAE developers continue to trade at a discount to emerging markets and global developers.
Benzerroug added: "On a price to book value and a price to earnings multiple, UAE developers trade at a discount to emerging markets and international developers. UAE developers are trading at a 0.6x 2013 price to book value versus 1.0x for emerging markets and 1.4x for world developers."