The quality residential developments in Dubai ended 2012 with a strong Q4 performance to put the average annual increases at their highest since 2008, said a report by property consultancy Asteco.
The villa sales prices were up on average 23 per cent year-on-year and apartments made average gains of 14 per cent during the same period. The leasing market was no less impressive, with an average increase across all residential types of 17 per cent.
“The latter half of 2012 witnessed better than anticipated performance in terms of pricing, transaction activity and occupancy as well as new real estate launches,” remarked John Stevens, the managing director, Asteco Property Management.
“The sales prices for apartments and villas rose by 9 per cent in Q4 2012 alone, fuelled by increased confidence and improved financing. The buyer profile was dominated by self-use and investments for rental income, with expatriates taking a longer-term view of living in Dubai,” he added.
Interestingly the cash buyers outnumbered mortgaged sales, said the property expert in the report.
The areas that came out on top for villa sales year-on-year were the Springs which jumped 38 per cent reaching Dh9,700 per sq m; Jumeirah Islands which rose 28 per cent achieving Dh12,400 per sq m and the Arabian Ranches which grew 27 per cent to Dh10,250 per sq m.
In terms of apartment sales the Palm Jumeirah increased by 27 per cent to Dh15,100 per sq m; The Greens followed with growth of 23 per cent at Dh10,250 per sq m and Downtown Dubai which recorded an 18 per cent increase, rising to Dh14,000 per sq m, he added.
“The recent clarification by the UAE Central Bank that it will not impose any immediate loan-to-value (LTV) caps on UAE banks, suggests that existing LTV ratios are likely to remain unchanged, in which case Asteco forecasts that the sales market will enjoy continued growth in 2013,” observed Stevens.
According to him, the residential leasing market also witnessed robust growth across all developments researched with the exception of International City.
Increased enquiries pushed demand and prices up by 7 per cent for apartments and 5 per cent for villas in the fourth quarter, said Stevens.
In terms of supply and demand, Dubai is still benefiting from the Euro crisis and the Arab Spring as people seek stability and better economic conditions, he pointed out.
“Mid to high budget enquiries have increased and stock in popular developments is drying up. Indicative of the strength of the market, the take-up time of advertised units has declined steadily over the year,” he stated
The highest growth rates year-on-year for villas were recorded in the Springs, where a three-bedroom unit now costs Dh140,000 per annum, thus posting a 27 per cent increase, said the Asteco in its report.
The price of three-bedroom villas in Arabian Ranches too rose 25 per cent to hit Dh155,000 per annum. However, the most expensive area remained The Palm Jumeirah where a three-bedroom villa costs Dh325,000 per annum.
The apartment rental rates grew most in Discovery Gardens, with a 23 per cent increase to hit Dh45,000 annually for a one-bedroom unit; Downtown Dubai followed on a par with 23 per cent growth, a one-bedroom apartment now leases for Dh80,000 per annum.
The International City lagged way behind the 17 per cent average increase managing a 6 per cent increase, putting a one-bedroom flat at Dh24,000 per annum.
“If demand continues, we expect to see a shift in the market from being predominantly tenant-led to one controlled by landlords, especially in quality, well managed and established developments,” said Stevens.
In contrast to the residential market, the commercial market saw little movement during 2012, according to the Asteco report. The overall leasing activity improved but actual transaction levels declined during the second half.
The rates remain under pressure, with the exception of DIFC which recorded minimal growth. Sales prices were unchanged after a period of weak investor interest, it added.