The residential property market in Dubai recorded robust growth in nearly all sectors in the last six months with the lower budget end of the villa market registering the sharpest rise in values of 20.2 per cent, a report said.
The average prices for high-end villas rising by 8.9 per cent, while mid-range villas saw gains of 14.9 per cent, added Q1 market report for Dubai’s residential market 2013 released by real estate specialist Cluttons.
This trend has been mirrored in the apartment segment, where both high and mid-range apartments have recorded average price increases of 10 per cent each, while lower budget apartment units registered price growth of 14.6 per cent over the same period, the report noted.
Similarly, the rental market has also experienced substantial growth; high-end villas recorded average rental value increases of 9.7 per cent between Q3 2012 and Q1 2013, while the mid-range villa segment registered an average rent rise of 6.2 per cent.
Lower budget villas echoed the strong performance of the lower budget villa sales market, recording rental value growth of 19.6 per cent.
Apartment rental values also followed a similar pattern, with the sharpest rise in rents recorded at the lower budget end of the market with a rise of 12.7 per cent, followed by the mid-range segment that grew 7.7 per cent; the higher end of the market was the weakest performing segment at 6.4 per cent.
Cluttons’ research suggests that rising rental values are driving tenants towards lower budget options, which have struggled over the past two to three years, with even more secondary and tertiary locations enjoying renewed activity.
Steven Morgan, head of Cluttons UAE, said: “We are buoyed by the renewed confidence in Dubai’s residential market and increased activity in the sector. This has naturally led to price rises – as much as 20 per cent in one quarter.
“In many other developed markets this would be classed as a ‘boom’ and it would be short sighted not to have some consideration to this. We welcome moves from the Central Bank to prevent the development of an overheated market and the likelihood of a bust scenario.”
Transactional levels and improved confidence have clearly encouraged developers in the region. Nakheel announced the sales of 122 plots in Jumeirah Village Circle and Emaar announced and expansion of their Arabian Ranches development with a ‘Casa’ villa scheme.
On a larger scale, previously shelves projects have raised their heads again, including the announcement of a new ‘Mohammed Bin Rashi City’, a city within Dubai. Although a long way from fruition, this announcement clearly echoes an overall return confidence and a move away from the price collapses of 2009/10, the report said.
According the Cluttons report, Dubai is expected to be a key driver in the predicted growth of the UAE economy of 4 per cent in 2013. Dubai International Airport reported passenger numbers of over 57.8 million in 2012, paying testament to Dubai’s ideal location for global tourism and business.
Early 2013 was characterized by a period of confusion in the Dubai residential property market following the Central Bank announcement of a series of loan-to-value cap levels for expatriates and UAE citizens applying for mortgages of 50 per cent and 60 per cent respectively.
The bank is now in a period of consultation with the national banks and Cluttons speculates that a ‘watered down’ version of December’s legislation may be implemented in coming months. However, it remains to be seen as to whether such measures will result in a move towards a market controlled by cash rich speculators.