By Andy Sambidge
Knight Frank's Global House Index shows values have increased by more than 28% in past year
Dubai's property market has seen the fastest rising prices in the world over the past year to the end of September, a new Knight Frank report has shown.
Prices in the emirate have increased by more than 28 percent since the third quarter of 2012, according to the Knight Frank Global House Index, 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 index's strong performance has been assisted not just by headline grabbing price rises in Dubai, China and Hong Kong, but also in a number of emerging markets," said Kate Everett-Allen, associate at the London-based property consultancy.
Other strong performers included China, Hong Kong and Taiwan as Asian markets dominated.
Struggling southern European economies filled the lower reaches of the index, with house prices falling steeply in Croatia, Spain and Greece.
"There are still 17 countries where house prices fell in the year to September - all except three were located in Europe. Only Japan, South Korea and New Zealand interrupt Europe's dominance at the foot of the table," said Everett-Allen.
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.
The study is totally misleading when comparing Dubai with other cities. The study is limited to only "Freehold areas" in Dubai which comprises approximately around 15-20% of total housing available in Dubai. If you factor in the non freehold area where transaction do happen amongst the GCC nationals the price increase would be much lower. Nevertheless, freehold area has definitely increase over 40% in the past year or so and it would be an unfair comparison with the cities where almost the entire city is "freehold"
Housing is easy to quantify&write about, what's more difficult to put across succinctly and compellingly is how these same trends manifest themselves elsewhere - the cost of education & role of regulation. What's the impact on DXB's ability to build its vision?
An owner has rejected an offer from parents to increase fees by 20%, and the regulator is allowing an affordable, consistently strongly performing school (DSIB inspections 2009 - 2013), to close for 'business reasons'. The school is to be 'mothballed'.
Bearing in mind the demand for primary UK curriculum places, schools with no track record can open + charge 60K+ in fees for Year 1 right off the bat. I expect a 'new' school to open in its place, with fees double (or triple) current rates.
Just as landlords get round RERA's rent cap with 'family' moving in, private schools may have found a way round KHDA's rules for stability. An asset lost to DXB. An irretrievable year of my kids education. We should 'just leave', no?
The world expo has really triggered the prices in Dubai real estate market. The prices seem to increase till the world expo and this factor is attracting the investors from all over the world. Not only the house prices but also the rents have increased largely. Authorities must take steps to avoid an other bubble and burst situation. Thanks