Dubai real estate growth 'different to 2008 bubble'

Double-digit rise in prices on back of improving fundamentals, not speculation - Standard Chartered

Dubai's housing market is growing on the back of improving fundamentals with low off-plan sales, according to a new report by Standard Chartered.

It said the improvement in real estate prices - reportedly up by more than 30 percent for apartments over the past year - was not caused by speculators in the market.

The bank's report said this, alongside increasing real estate regulation, differentiated the price rally from the one in 2008.

Factors enabling this improvement included Dubai’s growing economy, an increasing population, and the prospect of the city hosting the World Expo 2020, said the report, adding that these limited the possibility of a new real estate bubble.

The report said in the past twelve months, residential prices in Dubai have increased by 38 percent for apartments and 24 percent for villas while rents have risen 20 percent and 17 percent respectively.

"The key difference between the real estate market in 2008 and in 2013 is off-plan sales. Flipping of off-plan properties was the main reason behind the previous boom-and-bust cycle. Authorities are deploying efforts to ensure that off-plan sales are controlled," the report said.

It added that the market has particularly benefitted from the two new property-related laws drafted by the Dubai Land Department - the Investor Protection Law and the Code of Corporate Governance for Developers.

"We expect housing-market supply to grow at the same pace as demand, with new projects being launched in a more planned and controlled manner than in the past," the report added.

“This commitment towards improving and strengthening corporate governance practices by protecting property rights has helped gain new investors and maintain existing ones. Stakeholders such as home-owners and tenants have regained confidence in the real estate sector, as reflected in the recovery of market prices,” said Standard Chartered.

Dubai’s housing market is comprised of 417,900 apartments and 62,000 villas. Residential supply has been growing at an average compound rate of around 8 percent. By the end of 2013, supply should increase by 19,400 apartments and 3,400 villas, assuming there are no delays in construction schedules.

Dubai’s property market was hit hard after the global financial crisis, with prices plummeting around 60 percent in 2009 and 2010.

Recently, the IMF has warned that the Dubai property market is again starting to display early indications of another bubble.

But Standard Chartered's report concluded: “Right now, we conclude that there are no serious indications of a speculative bubble in the housing market.”

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Posted by: sophia

can any one help me out ?? i have a group discussion on the current real estate market in dubai....n i hav no clue were to start !!! plz help me out!!

Posted by: james galy

7 reasons why property in dubai will crash. GET OUT.

1/ 50%vacancy in office space now being converted and sold as residential units adding to the glut of supply in residential
2/ banks still handing 80% ltv morgages and government new laws on hold as it would curb bank profits.
3/ outstanind value of morgages now 81% above the 2007/2008 levels reached immediately before the crash
4/ endless new supply to flood the market from bin rashid city to falcon city to 100s of new downtown blocks.
5/ the rupee is at historical lows and the indian economy is crashing as is their real estate. they are the biggest investors in uae property and now have further capital controls imposed on them.
6/ global unemployment rising, gdp growth is limited as is population growth in uae. qe is temporary.
7/ the uae has 220,000sq km of land compared to only 9,000sq km in singapore and much less in hong kong, manhattan or central london. more land means dubai price should always be substantially cheaper.

Posted by: Waqas

Now I will give some reasons why you are wrong
1) Biggest investors now are not Indians but Egyptians, Syrians and investors from nearby countries like Saudi Arabia. And unlike Asian or western investors, regional investors are more likely to stick through thick and thin and not run away at the first sign of trouble
2) Global unemployment has no effect, in fact it can be predicted that with global economic problems rising, Dubai will prosper even more as a safe haven
3) Mortgage laws also wont have a big effect as most investors now are now buying in cash.

Posted by: Joselito Camangyan

In anticipation of Expo 2020, the rents started skyrocketing since the beginning of this year while the salaries are stagnating for many.

Posted by: RayC

The world believed the banks & financial institutions before in 2005-2007, and that is how we got the worst economic depression & meltdown in the history. Last year SCB England global report predicted that the Indian Rupee will strengthen by end of 2013 will settle down somewhere near Rs 40 to a Dollar. Loot at the India currency today when we are nearing the end of 2013. It is depreciated to Rs 68 to a Dollar. Hello SCB, wonder why you pay your analysts such high salaries for such horribly wrong predictions & projections. Please refrain from misguiding the public !

Posted by: Sue

Pay back the investors first before you take anymore money off
Honest investors

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