Dubai property prices overtaking 2008 peak
Home values in Dubai rose by a third in 2014, with some areas reaching record prices, overtaking the previous peak of 2008
Property prices in some areas of Dubai have overtaken previous record values of 2008.
Prices in Palm Jumeirah and Dubai Marina are around 4% higher than the earlier market peak, says leading global agency, JLL.
In 2013, average residential property values grew by 33% year-on-year and this year, they are expected continue rising, although at a slower rate, according to JLL’s Dubai Real Estate Market Overview for the first quarter of 2014.
“The Dubai real estate market commenced 2014 with optimism, driven by last year’s strong performance and positive sentiment from the Expo 2020 win. This optimism remains focused on the residential sector, which witnessed increased prices and rents across all areas, with rates growing faster in secondary locations,” the report says.
Foreign buyers were active in the market, with 162 different nations purchasing AED114billion of property in 2013, almost half of the AED236billion total, according to Dubai Land Department data.
The total residential stock in areas monitored by JLL from January-March 2014, stood at 365,000 units. Around 1,800 properties, mostly apartments, were handed over, including villas in Phase One of Falcon City in Dubailand, Atlantic Tower in Dubai Marina, Rixos Residences on The Palm Jumeirah, Green Park in Jumeirah Village and Park Central in Business Bay.
Another 24,000 homes are expected to be handed over in 2014. They include Lakeside in IMPZ, Silicon Gate 1, in Dubai Silicon Oasis, Madison Platinum 1&2 in Dubailand and The Matrix in Dubai Sports City.
Over the next two years, there are expected to be another 39,000 homes brought to market, a 9% rise on the existing total, although JLL expects some projects will experience delays.
“There is a shortage of middle income housing in the Dubai market. The demand for middle income housing is expected to further increase over the next few years, widening the current gap. This creates an opportunity for the real estate industry to deliver sufficient product to meet and benefit from this growing demand.”
The REIDIN general Residential Sale Index improved 30% year-on-year in February 2014, with apartments values rising by one third, outperforming villas that increased 20%.
The REIDIN Rent Index was up 23% annually and 7% in the last quarter. Apartment rents rose 26% and villa rents 12% year-on-year. The rise is set to cause some tenants to move to more affordable areas or relocate to the neighbouring Northern Emirates, says JLL.
“As Dubai’s economy and property market continue to recover, new tighter regulations were introduced in 2013 to avoid further speculation and prevent a bubble. These efforts are expected to continue into 2014 as similarities are drawn between today’s market and the speculative activity witnessed in 2008.”