Residential prices in Dubai soared by almost a third (30.6 percent) in the first six months of 2013, a new report found, on the back of an influx of refugee capital and as more renters turning to buying.
The analysis, by global real estate firm Cluttons, said that in Q2 of this year alone, villa prices in the emirate increased by 21 percent on average, compared to a 24.4 percent rise in the same period of last year. Apartment valuations recorded capital value increases of 25.1 percent, up from a 13.4 percent uptick in the year ago quarter.
The report found that property prices were still 31 percent below their market peak in 3Q2008, however.
Cluttons said that an increased level of job creation was pushing up prices, as well as investment spurred by political unrest elsewhere in the region, increasing rents and more favourable lending conditions.
"The resounding success of Dubai residential so far this year should not come as a surprise given the magnitude of the correction recorded during the bottom of the market; we are still far off the previous peak, when growth was far more unsustainable,” commented Steve Morgan, head of Cluttons Middle East.
“The acceleration in residential capital values this year has been underpinned by robust levels of job creation and a rising population, rather than being fuelled by 'fly-buy' dealers, as was the case in the past. We are yet to see a definite solution on the matter, although this is less concerning than in 2008, given the increased number of end-users in the market," Morgan added.
The Cluttons report added that rising costs were also having a spillover effect on the Sharjah market, where rents rose 7.1 percent in the second quarter.