Dubai house price growth slows dramatically in 2014

New CBRE report says prices rise by just 7% in last 12 months compared to 24% during previous year
Dubai house price growth slows dramatically in 2014
By Andy Sambidge
Tue 16 Dec 2014 01:13 PM

Dubai house prices have risen by seven percent in 2014, less than a third of the growth seen in the previous year, CBRE said on Tuesday.

The residential segment experienced a period of relative stability during the second half 2014, with rental rates remaining broadly flat. 

Over the course of the year, modest growth of around 7 percent was recorded, compared to 24 percent during 2013, according to global property consulting firm CBRE’s year-end market update.

It said that over 20,000 new units are expected to enter the market during the course of the next 12 months which could have a deflationary impact on sales and rental rates.

“Over the past 12 months the sales segment has comprehensively outperformed the rental market, recording an 18 percent growth year-on-year as compared to 30 percent in 2013," said Mat Green, head of research and consultancy UAE, CBRE Middle East.

"This disconnect is highlighted as a potential area of concern for the market, with mounting pressures on rental yields as a result. However, despite the slowdown, the market continues to see strong occupier and investment demand for well located, good quality residential apartment buildings, a fact backed up by recent transaction numbers in the established community locations,” he added.

“Over the course of the year, the residential market has progressively slowed with transaction volumes well down on 2013 performance."

Despite a rise in new stock and high vacancy ratios, office lease rates have surged across the prime and secondary locations, CBRE said in the report.

Single held quality office assets across prime and secondary areas have benefited the most, recording rising lease and occupancy rates.

“Overall, we expect the scheduled pipeline of offices to help constrain rental inflation and add more balance to the market in the coming quarters," said Green.

As of end of 2014, the total office stock stands at close to 8.1 million square metres rising from 7.7 million sq m as of the end of 2013. 

According to the CBRE annual market update, the retail sector remained buoyant during the year, with major retail centres recording occupancy rates of over 95 percent and with strengthening lease rates.

A positive economic outlook and an increase in tourist numbers, combined with a rise in per capita income and changing consumer behaviour are currently acting as a growth catalyst for the sector, CBRE said.

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