Dubai house prices forecast to rise up to 15% in 2014

New Knight Frank report says Dubai will see the highest price increases in the world next year
Dubai house prices forecast to rise up to 15% in 2014
By Andy Sambidge
Fri 20 Dec 2013 01:51 PM

Dubai's real estate market is forecast to be the world's top performer in 2014, building on this year's rapid price growth, according to a new report by Knight Frank.

The property consultancy's Prime Global Forecast predicted price growth of between 10-15 percent next year, ahead of Asian powerhouse markets such as Beijing and Shanghai.

Sydney and Paris rounded out the top five markets for 2014 with predictions of up to 10 percent growth, the report showed.

Knight Frank said although new regulations such as the recent mortgage cap were likely to slow growth in the final quarter of 2013, price rise growth would probably speed up again in early 2014.

"Although there are signs that transaction volumes have fallen back since the introduction of these measures – which should dampen the quarterly rate of increase in the final three months of this year – we suspect that price growth will quicken again in the early part of 2014," the report said.

"In the last quarter of 2013 Dubai has seen a doubling in the transfer fee to four percent, mortgage caps for both expatriates and nationals and Emaar, a part state-owned developer, banning real estate agents from selling on off-plan property before completion. All of this has come into play in order to ease residential price growth in the emirate, which so far this year has been running at a rate of 18-22 percent year-on-year," it added.

Knight Frank also said that home buyers had been showing signs of taking a "wait and see" approach prior to the decision on the Expo 2020 which was awarded to Dubai.

Earlier this month, Knight Frank said Dubai's property market had seen the fastest rising prices in the world over the past year to the end of September.

Prices in the emirate increased by more than 28 percent since the third quarter of 2012 compared to an average rise of 4.6 percent across the 55 markets covered worldwide.

The index showed that Dubai real estate values have jumped nearly 12 percent in the past six months and by 4.5 percent since the previous quarter.

The recent increase in prices in Dubai has sparked fears of another price bubble being created.

But last month, Mohamed Alabbar, chairman of Dubai’s biggest developer Emaar, said the government will not allow "unjustifiable" rent increases to fuel a new price bubble on the back of the emirate's Expo 2020 win.

Concerns have been voiced that the Expo victory could cause property developers to build too many residential and commercial projects, and investors to pour too much money into them, inflating a speculative bubble that would eventually burst.

Such a bubble popped in 2008-2010, when the global financial crisis caused Dubai property prices to crash by more than 50 percent, shaking financial markets around the world.

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