Signs are emerging that Dubai's real estate market growth may be easing to more sustainable levels, Knight Frank said on Monday.
In a new report, the property consultants said annual growth for both prime apartment and villa prices slowed to 15 percent in the fourth quarter of 2013.
This was notably slower compared to the preceding four quarters when the annual growth rate averaged 21 percent, Knight Frank said.
"The deceleration in price gains didn’t come as a surprise. After all, a number of 'cooling' measures were introduced in the final half of last year, including the doubling in the transfer fee to four percent and new mortgage caps," the report said.
However, it added that prime residential prices in Dubai are still almost a third below their previous peak.
"The fact that there is little in the way of new apartments due to be delivered over the next 12-18 months, we think there is decent scope for prices to play catch-up," Knight Frank added.
In November 2013, the Bureau of International Expositions (BIE) announced its decision to award Dubai the World Expo 2020, providing a boost to confidence.
In turn, developers announced a number of large residential schemes; however, most of these were at the mid-range end of the market rather than prime.
Victoria Garrett, residential associate director at Knight Frank, said: “New units worth AED10 million or over are expected to account for almost 10 percent of existing stock in 2014, but nearly all of these will be villas located on one development. Moreover, our estimates show that this figure will fall to 1.6 percent in 2015, before rising to 4.6 percent in 2016."
Going forward, Knight Frank said it considers that prices could rise by 10-15 percent this year, with the differential between prime apartment and villa prices closing as the former outperforms. It said the supply of apartments is expected to be by and large constrained this year."
Dubai's real estate brokers claimed commission totalling AED1.8bn ($490m) during 2013, the Dubai Land Department said on Saturday.
Property intermediaries, companies and individuals - registered under RERA, the regulatory arm of the Dubai Land Department, receive a standard two percent commission based on the value of the transaction, unless both parties agree on a different amount.
Earlier this month, Dubai Land Department announced that the total amount of real estate transactions in Dubai exceeded AED236 billion ($64.2 billion) in 2013, up from AED154 billion in the previous year.For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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