The residential property market in Dubai recorded robust growth in 2013 with the average apartments and villa sales prices up by 60 per cent year-on-year, said a report.
Quality residential developments in Dubai ended 2013 with a strong fourth quarter performance to put average residential sales prices up by 60 per cent year-on-year, according to Asteco Property Management.
Dubai’s leasing market was no less impressive in 2013, with an average increase across all residential apartments and villas of close to 50 per cent and 20 per cent respectively, said the report.
“Sales prices for apartments and villas rose by 23 per cent in the fourth quarter alone, fuelled by increased confidence and the fact that the new law regulating maximum LTVs was not being consistently enforced, although cash buyers still dominated,” stated John Stevens, the managing director of Asteco Property Management.
“Owner occupiers and investors were keen to enter the market as rental rates were on an upward trend, which indicated better returns and potential for capital appreciation in the medium term,” added Stevens.
The areas that came out on top for villa sales year-on-year were the Palm Jumeirah which jumped 67 per cent reaching Dh3,000 ($816) per sq ft and Jumeirah Village Circle which rose 55 per cent achieving Dh850 per sq ft. The rest of the freehold markets grew between 22 per cent and 30 per cent, said the Asteco report.
In terms of apartment sales, Discovery Gardens increased by 83 per cent to Dh825 per sq ft, followed closely by Dubai Marina with growth of 81 per cent at Dh1,900 per sq ft and Downtown Dubai which recorded a 69 per cent increase, rising to Dh2,200 per sq ft.
“We anticipate that 2014 will see a continuation of the trend witnessed in the previous year with sales prices increasing, albeit at a slower pace, as approximately 25,000 residential units are forecast for completion this year,” remarked Stevens.
The residential leasing market also witnessed significant growth across all developments researched with average prices up by 22 per cent for apartments and 6 per cent for villas in fourth quarter of 2013.
According to Asteco, the rental growth was driven partially by continued unrest in the region, Dubai’s winning Expo 2020 bid and an expanding economy.
In addition new road networks and facilities such as parks, retail, health clinics and schools, have created more demand for previously unpopular communities, it stated.
The highest growth rates year-on-year for villas were recorded in Mirdif, where a three-bedroom unit now costs Dh140,000 on average per annum, a 40 per cent increase; villas in Arabian Ranches rose 30 per cent to an average of Dh215,000 per annum for a three-bedroom house, said the Asteco report.
The most expensive area remains The Palm Jumeirah – a three-bedroom villa there costs Dh350,000 per annum on average, it stated.
The apartment rental rates grew most in International City, with a 76 per cent increase up to Dh45,000 annually for a one-bedroom unit; Jumeirah Lake Towers followed with 50 per cent growth, on average a one-bedroom apartment now leases for up to Dh95,000 per annum.
Discovery Gardens grew by 44 per cent on average since last year, with the rental rate for one-bedroom flat now up to Dh75,000 per annum.
In contrast to the residential market, the commercial market saw little movement during 2013. Overall leasing activity was relatively slow, but significant improvements were witnessed in terms of the amount of enquiries and size requirements, said the property expert.
Asteco believes that the market has now bottomed out and expects to see some growth over the short to medium term, especially for single owned and managed buildings.