By Andy Sambidge
New report highlights impact of gov't measures to dampen property speculation in the emirate
House prices in Dubai showed no increase during the third quarter of 2014, the first time since Q2 2012 that there has been no quarterly rise, Colliers said on Sunday.
Colliers International's Q3 2014 Dubai House Price Index, compiled using actual mortgage transaction data from a consortium of financial institutions, recorded no change at 170 points.
Ian Albert, regional director at Colliers International said: “When we analysed the data we received from the banks for Q3, it was clear that the measures introduced by the government to dampen property speculation at the end of 2013, are now taking full effect.
"With no change recorded in Q3 and with growth falling from 5 percent to 3 percent in the previous two quarters, the pattern could indicate a levelling off of the market.”
Colliers said different unit types recorded minimal changes in price quarter-on-quarter, with apartments decreasing by 1 percent, townhouses increasing by 2 percent and villas remaining the same.
The year-on-year results, however, revealed robust growth with apartment sales prices increasing by 9 percent year-on-year, townhouses increasing by 23 percent and villas increasing by 20 percent.
Given the growing demand for more affordable locations, a high level of activity and growth was witnessed in Motor City which saw an increase of 30 percent compared to Q3 2013, Colliers added.
"As tenant demand has increased in more cost effective locations, so has the attraction to investors with the overall impact being a consecutive increase in rents and sales prices," the real estate consultancy said in the report.
The report pointed to a number of other factors influencing the real estate market, including the capital gains tax on overseas investment implemented by the Indian government, and the fluctuations in value of the Ruble.
Albert said: “Although the results from the Q3 HPI suggests that the market is stabilising, recent developments in the broader economy such as the decline in the price of oil and foreign direct investments could result in a new spell of market adjustment.
"A sharp decline in prices, like the one seen during the financial crisis is not expected however. The market today is highly regulated through RERA, protecting individuals, banks and developers and ensuring that the overall market is better able to manage a downturn,” Albert added.