Dubai property is "back on its feet"

Photo credit: Chusico

2012 saw Dubai's real estate bounce back from a severe financial crash, with low prices making the market a buyer's dream. 2013, though, saw the emirate transform into a seller's market, with escalating prices providing strong returns for property owners.

Rising rental prices also forced tenants to move to secondary and less posh areas, according to a report from Bayut.com, introducing a broader-based recovery.

For the first nine months in 2013, the total transaction value crossed AED 162 billion, indiciating the volume of buying and selling in the market. Such high demand pushed property prices up rather sharply.

This sharp rise prompted warnings from the IMF, which cautioned that the market was becoming overheated thanks to speculative investors.

Indeed, the IMF estimated that residential prices rose by 16 per cent in the first four months of last year alone, notes the Wall Street Journal. Bayut.com's figures, though, put the growth even higher at 42.9 per cent across the year.

To curb any potential bubble behaviour, the Dubai government introduced cooling measures, including mortgage caps and the doubling of transfer fees from 2 to 4 per cent.

At the same time, rising prices have forced some buyers to give up the idea of buying units in primary areas and shift to secondary areas instead. But Dubai Marina continued to boast steady sale and rental prices throughout the year, except for a few, very minute falls here and there. The same can be said about Downtown Dubai, where the sale price of studio & 1-3 bedroom apartments registered steady hikes of 15.17 per cent in their sale prices during 2013.

Abdul Kadir Faizal, CEO of ERE Homes, believes that primary developments, including Palm Jumeirah, Dubai Marina, Downtown Dubai, Emirates Living and Jumeirah Park, will be favoured by buyers and investors this year.

Indeed, Palm Jumeirah had a good 2013 since almost all apartment units there exhibited healthy spikes throughout the year, registering an overall spike of 27.54 per cent in their sale prices.

Now, the outlook for 2014 is increasingly positive. January saw the Bureau of International Expositions award the emirate the World Expo 2020 show, which was heralded as a sign of industry confidence in the housing market. This week, meanwhile, a Hong Kong-based investor spent a staggering £1.1 billion on assets from developer Dubai Pearl, reports Reuters, a sign of growing demand from Chinese buyers.

Bayut.com CEO Imran Ali Khan believes that the Expo 2020 win will only boost the market further: "What 2014 will bring for the property market of Dubai is a little hard to predict, however, one thing that can be said with surety is that Dubai market has gotten back on its feet and has indeed made a full comeback. Winning the bid to host Expo 2020 is likely to have a positive impact on the market and it could help stabilize the sector for years to come."