Land and property sales in Dubai have skyrocketed by 67 percent in a year with $6.26bn of transactions made to the end of July, figures show.
Official data from the Dubai Land Department, covering real estate transactions in the emirate, also showed a similar boon in mortgages over the same period of time.
Real estate agents say residents are increasingly looking to buy their own property as they cash in on an “under-priced” market while shunning rising rents.
An analysis of the Land Department data by Arabian Business showed property sales totaled $6.26bn between January and the end of July this year, up from $3.74bn for the same period last year.
Mortgages registered with the department also skyrocketed more than 65 percent over the first seven months of the year, from $6.91bn to $11.5bn.
For real estate sales, the data pointed to the number of transactions increasing from 1922, or 275 a month, last year to 3012, or 430 a month this year.
Mortgage transactions jumped from 1632, or 233 a month, to 2385, or 340 a month.
The upward trend looks set to continue with sales figures for this month at $498m, compared to $239.5m last August.
Ross Gardiner, director of Dubai’s Lannhill real estate, said applications through its in-house mortgage service had spiked.
“This year we’ve already done more mortgage applications than all of last year,” he said.
“I think people are very well aware that Dubai as a whole is under-priced. What you’re paying here per square foot to be in a prime location – you can’t get anything like that.
He said a recent property with a water view in Downtown sold for AED2500/sqft ($680/sqft). This compared to AED10,000-30,000/sqft ($3040-$9119) in London.
Gardiner said the issuing of one or two rental cheques upfront also had an influence on whether people chose to rent.
“Do I just stump up the amount I need to put down a deposit and buy something smaller and maybe live in it,” he said.
“But again, people living in Dubai, they sometimes want to buy a one bedroom, but they can afford to rent a four bedroom.”
According to an analysis by Better Homes, Dubai’s biggest real estate company, about 88 percent of those surveyed rented in Dubai, with 12 per cent choosing to buy their own homes.
Craig Plumb, heading of research for the Middle East and North Africa at Jones Lang LaSalle, said anecdotally it appeared that more people were looking to buy rather than rent units/villas in Dubai.
However, there was not yet any firm data on this.
Better Homes’ manager of residential sales and leasing, Harneet Singh, said rental price increases meant people in some areas were paying AED120,000 ($36,475) or more annually.
“It makes complete sense to pay monthly to the bank and own the unit than paying heavy rentals and not owning the unit at the end of the day,” he said.
Singh said rising rents also influenced property investors.
“It is all based on the net ROI (Return on Investment) for a particular unit,” he said, adding that normally ROI was around 6 percent to 8 percent for apartments and 4 percent to 5 percent for villas.
Gardiner said projects in Dubai were being completed in waves now, meaning there were periods when renting became quite cheap.
“You’ve got your shift where people can move into a four-bed house and rent it for AED150,000 ($45,594), AED200,000 ($60,792) until the area becomes big and popular where it doubles in price,” he said.
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