By Andy Sambidge
Report says average rents have increased 6.8% amid property rebound in emirate
The price of apartments in Dubai has risen by nearly five percent since the beginning of 2012 and the trend is likely to continue, real estate specialist Cluttons has said in a new report.
Its Q3 market report noted an overall price stability across the emirate and some price rises in specific areas.
It said apartments in Dubai have increased in value an average 4.9 percent since the beginning of 2012 while rental values increased 6.8 percent.
However, Cluttons said there were areas in the emirate that did not see any growth in prices during 2012.
Cluttons said it predicts that prices will remain relatively stable over the next 12 months, as the 24,000 residential units scheduled to be delivered in the second half of 2012 will bring a large stock of supply onto the market making huge price uplifts unlikely.
Its report said the price of high-end villas rose from AED1,100 per sq ft in January to AED1,300.
Mid range villas have also witnessed a rise in sales price from just under AED750 per sq ft in January to nearly AED900.
Cluttons said that villa prices now match those seen in spring 2007, prior to the global economic crisis that resulted in a severe correction in the Dubai real estate market, when prices slumped up to 60 percent.
According to the Dubai Land Department, Dubai property transactions grew 21 percent to $17.15bn in the first half of 2012.
Cluttons said valuation instructions for both villas and apartments have increased by 23 percent since Q4 2011 and 50 percent of these represent mortgages of new property acquisitions.
Cluttons also said that proximity to metro stations in Dubai is now a factor affecting prices.
"The majority of areas close to the metro stations have maintained their demand and in most cases have increased in both capital and rental values," its report said.
Whilst I agree that a rise of 4.9% on the selling price of Dubai apartments is a positive step in the right direction for the industry, it constitutes a 'green peeping shoot' not a major recovery.
Especially when you bear in mind that the asking price on which the percentage rise is applicable is somewhere around 65% lower than it was in mid-2008, this makes the 'real terms' increase somewhere to the right of the decimal place.
Also, note the reporting caveat of apartment new stock arriving on the market, suppressing further price increases, that is also true of villas, a number of projects coming to fruition in that respect, this year and early next.
Naturally frustrated owners given the good news, are about to usher their properties hurriedly on to the market once again in the hope of a buyer, which will only complicate the pricing mix still further.
I agree with Red Snappa and moreover, any price increase in this market at the moment and probably for another 2-3 years at least is unjustified and simply backed by greed. Any bit of news or slightly increased demand (keeping in mind the thousands of apartments coming to market and few hundreds of villas very soon) are far from good reasons for individual owners to take an extra 4.9% or 6.8% or even 1%. Remember, it happened once, it can and will happen again!
Well....one can boast of what they feel like but the fact still remains stranger than fiction....rises are fictitious and no visible business has been done on these rent hikes.... apartments are still vacant.....
Please try to be reasonable and make things more affordable so the business starts moving collectively instead of shooing off customers with unrealistic prices......
It is for sure agreeable that investment might have come in for purchases of properties, reason being prices are on low....but again for existing expats...please provide them justified prices with rent to own and other flexible options for purchasing properties...it is all for common good....
May good sense prevail....
This week's offer on my Arabian Ranches townhouse is now at the June 2007 level I paid for it and up AED500,000 (or just over 20%) on a year ago.
The proof is in the pudding doomsayers!
All the critics on Dubai realty price, it's now a fact and not fiction that the Dubai prices ( selected areas) are up by 30% from there troughs. I bought my Fairways, greens at 1.4 MM gross and today I've a offer of 1.8MM net. I'm still holding on to it as I firmly believe a further upwards trend.
If Dubai wins the bid for World Expo 2020, then I guess you can see those crazy days. All the best who still think it's fiction.
I wonder why the critics here are reducing in number
The market is definitely fragmented. It is too early to call it a recovery. We need to look at new jobs being created and new hiring. As far as I can see, that is not happening. The villa market seems to be doing relatively better. Supply far outstrips demand for aparments which maintain artificially inflated prices. People don't have the kind of disposable income for the type of accomodation that is on offer. It is going to be a long road.
VFB...so you're saying Dubai real estate prices went up by 30%..just based on your little 1 bed flat? that's really cute.
I'd like to invite you over to my office for some masala chai and explain to you the concepts of real estate markets and valuations.
Property moves in cycles and regardless of figures based on "selected" sales, current overall figures show that we are still lingering close the bottom of the current cycle. Well located, well priced property will always sell no matter what part of the cycle we are in. Niche properties with unique advantages (such as location, views, extra quality etc) are always a first consideration for buyers and make sound investments. Owners and over zealous agents can ask what prices they want. Unmotivated sellers with these unrealistic prices will still be on the market long into the future.Supply and demand rules still apply, even in the subjective real estate market. Willing seller, willing buyer dictates the true market figure. With so many new villas and apartments about to hit the market, I see the continuance of a buyers market. Remember, real estate is not a short term investment. Typical cycles will run around 10 years - have patience.