The number of Gulf nationals buying holiday homes on Dubai's manmade Palm Jumeirah increased by around 25 percent last year, balancing the decline in Russian investors, who are instead favouring cheaper distressed assets in Europe, one real estate expert told Arabian Business.
“We are about 25 percent up on GCC investment in 2012,” said Mark Towers, managing director of Dubai-based real estate agency Edwards and Towers.
“Locally people have seen that the market has started to pick up and on the Palm we get a lot of second home purchases… From Abu Dhabi and from Saudi Arabia, for holiday and weekend homes.”
An Edwards and Towers report also reported a “slowing of Russian acquisitions across both apartments and villas”. Towers said Russians were now buying smaller units and were starting to shun Dubai, instead focusing on markets in Europe with cheaply priced distressed assets.
“Obviously there is a comfort zone and especially if you can get more for your money. You do find the Russians like a fixed price so if the market is moving upwards they take longer to negotiate, where as other nationalities track the market and push for an upward curve,” Towers said.
Across other nationalities, the report said “we are still seeing an influx of capital from countries affected by the regional unrest, although this impact has not been as significant as during 2011 when there was a notable surge in capital inflows.”
Nearly 85 percent of villa Palm purchases in 2012 were made in cash, the report claimed. “There is a certain aversion locally to residential finance. People have got tired of returns in the bank .There are a large amount of Emiratis and GCC investors who think the market is cheap and in hindsight they were right,” Towers said.
The report showed the highest returns were on Oceana apartments, where prices rose 18 percent to around AED1,850 per sqft and Garden Homes Villas, which rose 28 percent to AED1,800 per sqft and selling prices averaging around AED8m to 10m.
Figures from the Dubai Land Department show the number of transactions on Palm Jumeirah rose just two percent to 1,154, while the amount of transactions surged 26 percent to AED5.155bn.
Developer Nakheel began selling new units on the Palm in April 2012, when it launched Palma Residences, the first new residential project since the property market crashed in 2008 and saw prices tumble by nearly 60 percent.