By Andy Sambidge
Prime Global Cities Index ranks Dubai villas market second in world for Q3 performance
The price of villas in Dubai has risen by 19.9 percent in the past year, according to the Knight Frank Prime Global Cities Index for the third quarter of 2012.
The global index, which rose by 1.1 percent in the three months to September down from 1.4 percent in the previous quarter, also showed that villa prices in Dubai rose 2.9 percent in Q3.
The price growth for the six months from March to September was recorded at 11.1 percent, making Dubai the second best performing market of the 26 cities tracked by the index, behind Jakarta.
Five cities recorded double-digit price growth in the year to September - Jakarta, Dubai, Miami, Nairobi and London.
"Cities such as Dubai, Miami, Nairobi and London are increasingly considered investment hubs for high net worth individuals (HNWIs) in their wider regions," Knight Frank said in the report.
"In the wake of the Arab Spring, Dubai has been seen as a relative safe haven for MENA buyers while Venezuelan and Brazilian investors have looked to Miami to limit their exposure to domestic political and economic volatility."
Property prices in Dubai soared after the city opened its real estate sector to foreign investors in 2002, granting them freehold ownership rights at many developments.
From start-2007 to mid-2008, prices rallied almost 80 percent, Morgan Stanley estimates showed, with billions of dollars worth of new projects launched by local developers.
But home prices in Dubai suffered the biggest reversal seen in the Gulf property market as result of the financial crisis, declining on average 60 percent.
Fifteen of the 26 cities (58 percent) recorded flat or positive price growth in the year to September, but over the last quarter that increased to 20 of the 26 cities.
The index now stands 18.7 percent above its financial crisis low in Q2 2009 with Hong Kong, London and Beijing having been the strongest performers over this period, recording price growth of 52.9 percent, 45.4 percent and 39.5 percent respectively.
Cities in Europe remained the weakest performers, recording a fall of 0.5 percent on average in the last 12 months, the index showed.
In Paris, although prices held firm in the third quarter, sales activity was muted as buyers of all nationalities adopted a “wait and see” attitude.
Knight Frank said vendors are unwilling to reduce prices until there is greater clarity from President Hollande and the Eurozone leaders in relation to the debt crisis.
"Asia’s prime markets look to be entering a period of more moderate growth due in part to the regulatory measures aimed at cooling prices and improving domestic affordability," the report added.
James Price of Knight Frank’s International Residential Development team said: “Aside from London, it would appear the other strong performers are either those established international markets that experienced a lull but are now ‘kicking on’ again (such as Miami, Dubai) or those that could be described as second tier international cities – strong established markets, but not global ‘gateway’ cities (Zurich, Vienna, San Francisco), where interest has driven price rises from a lower base.”
If they were up 19% I too would have a for sale sign up. Would not surprise me to see asking price up 19% but actually bidding price or closing price to be at even or below even.
Move to Mirdif with your families ....cheaper rent and close to all amenties !!
Very vague article. Does that mean that a JVC villa has gone up 19% too? Don't think so.
I hope Knight Frank use a better PR company in future.
Dubai & AbuDhabi has more potential to outperform all the above cities if there were more investor friendly. A. Solve disputes between investors and developers which is taking time and lot of good money after bad investment. B Transparency C.3 year residence visa as the developers had promised and announced in media at initial state.
Prices are up much higher than 19%. I would say more like 50% for villas. Springs 4M were 1.1 million a year ago now then are 1.5-1.6 mil. Only problem is they are being taken up by speculators. I wouldnt be surprised if they peak out again early next year.
OK well how come the market isn't flooded with villas for sale, there are 100's of owners who've been waiting for this moment to offload at a more acceptable price.
Plus another how come? and the total number of properties for sale in Dubai on one of the main listing sites, which admittedly is a mix of villas, t-houses and apartments, has barely changed from 22,700 for months now.
Are KF's figures based on the 'actual' sale price of villas physically sold, i.e. price agreed and dwelling under new ownership or new asking prices?
Also if the famous average fall in prices, since 2008, was 60%, probably more in some cases, let us say that the asking price for a villa in 2008 was for the sake of argument AED 4.5 million. Reduce by 60% and that becomes AED 1.8 million. Uplift by 19.9%, there has been little if any increase in prices until this year, then latest price becomes AED 2.16 million, that is still only 48% of what you paid for it! Big% rise on a low starting price is deceiving!
The problem with all this rah rah cheerleading is nobody believes a single cough or grunt. If a single villa price was up an achieved 19.9 per cent, maybe, but there are no actual facts to support the Frank Knight claims. They clearly have no actual trading going on, which allows for these make believe and feel good exercises.
It is such fun to read reader comments they sometimes out do the article itself! This article like most others on Dubai real estate by AB recently is spot on with some qualification like the location and desirability of the property but these 20% gains made by smart investors who were not waiting for the positive reports to come in but moved in on gut feel will most likely not be repeated by those who came in late! but Dubai offers the best value for money in the region even at the 2008+20% price level.
KF...have you every heard about dead cat bounce... or double dips?
Instead of cheering again, give investors well researched materials. Dubai has too many under-construct villas.
and your statement, dubai being any sort of value for money at 2008 +20% price level, gives you any credibility?
I have heard of those smart investors, mainly from countries that are in a mess buying villas and apartments cash. Doesn't take a genius to figure out what sort of business is happening here.