Dubai’s battered property market is on the cusp of a rebound as real estate prices in the city’s prime locations show their first increases since the recession, said property broker Cluttons.
Villas located in projects including Palm Jumeirah, Arabian Ranches and the Meadows have seen a one percent price rise since the second quarter, the consultancy said a research report, with villa rents across the emirate rising by 0.7 percent during the period.
“Properties found in more desirable areas have seen sustained values and in some cases growth,” the report said. “The early part of the year was characterised by uncertainty and unrest both within the region and overseas, but Dubai is now showing signs of optimistic improvement.”
The rise in rents and sale prices has not been reflected in property prices across the board, the report warned, with apartment rents bearing the brunt of market instability.
“Less desirable locations are still experiencing the effects of the supply-demand gap with 10,000 – 15,000 new units expected to be delivered this year,” the report said. “Apartment rents in most locations have dropped 2.5 percent compared to Q2, 2011 figures.
Dubai’s real estate sector was hit hard in the wake of the global economic crisis. Home prices plummeted more than 60 percent as speculators fled the market and funding dried up.
Almost half of all projects in the emirate were cancelled or put on hold, as bank loans were called in and developers struggled to pay contractors.
US property broke Jones Lang LaSalle last week said the real estate prices in Dubai were close to bottom, aided by safe-haven investors fleeing political unrest in the wider Middle East.
Villa sales increased 59 percent by value even as volume fell by nearly a third, indicating that higher-priced properties are attracting the most buyers, the consultancy said.
Industry players said completed real estate projects with finished community facilities were most likely to reap the benefits of a pick-up in the market.
“What brings the interest back to the market is infrastructure... developed to the standard that the tenant demands,” said Martin Berlin, chief strategy officer at Dubai Properties Group. “Value has spilled into [these developments] and not new developments. The market has developed from a ‘build and they will come market’ to a ‘build what the customers demand’ market.”
Dubai-based developer Damac said prices were stabilising faster in developments between Sheikh Zayed road and the Dubai Marina, where tenants had access to community facilities.
“Unfortunately around Emirates Road, we still need more time for the infrastructure to be completed,” said Ziad El Chaar, managing director.