Dubai real estate market on cusp of recovery

By Elizabeth Broomhall
  • Sunday, 2 October 2011 11:28 AM
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Villas located in projects including Palm Jumeirah and Arabian Ranches have seen a 1% price rise since Q2

Villas located in projects including Palm Jumeirah and Arabian Ranches have seen a 1% price rise since Q2

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. 

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Posted by: Tanqsno Yamawt Sunday, 9 October 2011 9:31 AM[UAE] - Germany

RERA extended protection to unethical and greedy developers and oversupply are good reasons to delay any recovery for the next 10 years. Add to that expensive mortgages, legal costs, complicated and ever changing laws with unclear outcomes even for clear and easy court cases, no owners association, mortgage cost and inflated utilities & service charges, etc.... This is a dangerous cocktail that would put KO any one intending to buy a property in Dubai.

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Posted by: Richard Saturday, 8 October 2011 6:35 PM[UAE] - United Kingdom

Its little to do with Developers we were told the money is safe in the Escrow accounts to the Law this is the system our money is not in a building until they build, so if any money is missing from the Escrow account it is like a Bank Robbery and should be treated as such if there is large amounts missing from Escrow accounts it could be the Biggest Bank Robbery in history. If the money is now missing this would be a big Scandel would it not,
Thats what Escrow accounts are for to protect your payments and that is what makes buying in Dubai Safe,
Also if you take care of the small home buyer investors the bigger picture should take care of its self.

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Posted by: Lisa Saturday, 8 October 2011 4:35 PM[UAE] - UAE

Developers and investors have both suffered, nobody talks about the predicament of the developers. In my opinion the unscrupulous developers, which are a side-effect of a fast-booming emerging economy are being squeezed out now. Anybody who thinks Dubai is a dead loss is mistaken, but Dubai isn't what it was 5 years ago. Individual investors were dishing out deposits (without undertaking due diligence) because the returns were massive - for a while. Who cared about dodgy developers then?! Some investors over-extended themselves, blindly!

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Posted by: AAMIR Saturday, 8 October 2011 2:16 PM[UAE] - UAE

Undoubtedly I have immense trust in the leadership as well as the economy of Dubai and I am pretty sure that Dubai is creeping back in economic growth from onwards 2012 particularly. However, the most challenging job task it to continue with balanced and well rounded growth duly sufficient to handle counter cyclical things. More projects should not be allowed to construct and let the existing supply be absorbed by the market in 3-4 years time horizon. GOOD LUCK DUBAI

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Posted by: Richard Friday, 7 October 2011 10:03 PM[UAE] - United Kingdom

So how can my money be held for so long when there is no building as promised by December 2008 this is wrong, I need to move on .The Escrow accounts are great as long as RERA made Developers put home buyers money into the Escrow accounts as to the law this is why there is such good regulations,So when the builders start to build your rooms in the apartment your money is taken from the escrow account in stages and this pays for your apartment, the building owner owns the land and the structure of the building,So if there is no building now it is 2011 three years on no apartment,Why has my money not been returned?
Or have I got this all wrong?

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