Dubai has become a much more attractive investment location than some of its more high profile Asian rivals, according to a new global survey.
Average global prices rose three percent in 2011, according to the latest Prime Global Cities Index by London-based real estate consultancy firm Knight Frank. Luxury house prices are falling fastest in cities in Asia Pacific, it said.
While Dubai was ranked 15th on the list, with prices decreasing three percent during 2011, the emirate was well above some of its Asian regional rivals and some high profile European cities.
Topping the list as the best city to invest in was Nairobi, which rose 25 percent, followed by Miami, Jakarta, London and Moscow. Slipping below Dubai on the rankings were Paris, Shanghai, Geneva, Kuala Lumpur and Singapore.
“Anti-inflationary price cooling measures implemented by Asian governments, combined with worries that the Eurozone sovereign debt crisis will affect the global economy, have created a more cautionary climate,” said Kate Everett-Allen, international residential research at Knight Frank.
Earlier this month, property broker Jones Lang LaSalle was more pessimistic and forecast an ongoing decline in Dubai residential prices, particularly among apartments.
Average prices fell nine percent year-on-year to AED 8,960 per sq m in Q4 2011, with flats in Burj Dubai Downtown and Dubai Marina absorbing falls of around 11 percent.
Though the UAE will see an increase in property transactions over the next year, driven by private and wealthy buyers rather than institutions, this won’t translate into a spike in house prices, JLL said.
“Lower prices, more choice of higher quality product and its role as a regional safe haven will increase the attractiveness of the UAE market to both occupiers and investors in 2012,” the report said.
“We can expect ‘more’ positive signals from this year, with some of the key words being affordable housing… new realism, tenant friendliness and sustainability across the UAE real estate market.”
Looking to 2012, Knight Frank was upbeat that investors would refocus their priorities into real estate.
“A desire amongst wealthy investors to target property and other real assets over financial products, will reaffirm prime property’s safe-haven qualities in 2012,” said Everett-Allen.
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