Dubai property prices to hit 2008 levels

Photo credit: Chusico

JLL's report says that the emirate's property values surged in 2013 by 22 per cent, setting them up for a strong 2014. Indeed, prices are forecast to grow by 10 to 15 per cent, taking them back to the levels of the market peak in 2008, when prices plunged by 60 per cent as a result of the financial crash.

Dubai has already taken measures to cool down the thriving market, introducing mortgage caps and a ban on flipping real estate to discourage speculative investment. While Jones Lang Lasalle says that 2014 is not the year of a second burst bubble, a correction could be in the air if rents and prices continue to climb at unsustainable levels. Rents are expected to grow by 10 to 20 per cent in the next 12 months.
 
“We have been asking our clients what they think will cause the next correction and when it will come,” Craig Plumb, head of residential at Jones Lang Lasalle Dubai, told The National.

“We don’t think it will come in 2014 but we do think that it could come longer term, and if so it will be caused by one of four key factors: either an external factor which is financial or geopolitical."

“Or it could be that continued price growth finally makes the UAE a less attractive place for expatriates to live, " he added.

The most likely, though, according to Plumb, is that construction fails to keep up with demand, as people or materials find themselves running out of resources.