Cluttons delivers upbeat outlook on Dubai's real estate; apartment prices also up 10%
Real estate experts Cluttons has said average prices for high-end villas in Dubai are up by nearly nine percent over the past six months.
Its Q1 market report for Dubai's residential market said positive economic activity driven from tourism and business has led to "fresh property developments and confident property investment throughout the emirates".
Cluttons said luxury villa prices have increased on average by 8.9 percent between Q3 2012 and Q1 2013, while mid-range villas have experienced gains of 14.9 percent over the same period.
The lower budget end of the villa market registered the sharpest rise in values of 20.2 percent, although this was from a lower base than the rest of the villa market, Cluttons added.
The report said this trend has been mirrored in the apartment segment, where both high and mid-range apartments have recorded average price increases of 10 percent each, while lower budget apartment units registered price growth of 14.6 percent over the same period.
Cluttons said the rental market has also experienced substantial growth with high-end villas recording average rental value increases of 9.7 percent since Q3 2012.
The mid-range villa segment registered an average rent rise of 6.2 percent and lower budget villas posted rental value growth of 19.6 percent.
Apartment rental values also increased with the sharpest rise seen at the lower budget end of the market with a rise of 12.7 percent, Cluttons said.
The report said Dubai's strengthening property market was a reflection of the UAE's improving economic performance.
Dubai is expected to be a key driver in the predicted growth of the UAE economy of four percent in 2013.
Steven Morgan, head of Cluttons UAE, said: "We are buoyed by the renewed confidence in Dubai's residential market and increased activity in the sector.
"This has naturally led to price rises - as much as 20 percent in one quarter. In many other developed markets this would be classed as a 'boom' and it would be short sighted not to have some consideration to this.
"We welcome moves from the Central Bank to prevent the development of an overheated market and the likelihood of a bust scenario."
The central bank announced earlier this year a series of loan-to-value cap levels for expatriates and UAE citizens applying for mortgages of 50 percent and 60 percent respectively.
The bank is now in a period of consultation with the national banks and Cluttons speculates that a 'watered down' version of the legislation may be implemented in coming months.