Dubai: the world's fastest growing property market
Photo: Sboyd
Knight Frank's overall House Price Index shows that improving economic conditions are starting to have an impact upon global real estate, with property prices around the world rising 8.4 per cent last year compared to 4.6 per cent in 2012.
Indeed, 39 countries recorded positive annual price growth in 2013, a significant improvement upon 2012, when just 27 countries saw property values climb. Even in European countries, such as France and Spain, which are located in the bottom half of Knight Frank's table, the rate of decline has slowed.
There are some signs of positive growth on the continent, though: UK and Ireland prices have rebounded, while Madrid has joined Dublin as a "key European market in recovery", says Knight Frank, with prices climbing 5 per cent. Munich has also enjoyed a 10 per cent uplift in values, as investors seek safe havens to park their cash.
Indeed, it is no secret that London, for example, has seen a wave of overseas investment pushing up prices. Monaco and Vienna are also highlighted by the report as European investment hotspots, alongside key Alpine markets such as Chamonix, Verbier and Gstaad, where property prices climbed 8 per cent, 6 per cent and 3 per cent respectively.
The weakest property markets were Ukraine, Croatia and Greece, where prices fell 26 per cent, 14 per cent and 9 per cent respectively. Political unrest between Russia and Ukraine are likely to see demand and prices fall even further in 2014, rippling outwards to affect even more economies and real estate markets.
In Dubai, though, there are no such obstacles to stop the property boom, with both the emirate and the Irish city of Dublin enjoying soaring demand from buyers and even bigger leaps in prices.
Ireland's turnaround has been as staggering as its UAE rival: between 2009 and 2011 Ireland occupied the index’s bottom ranking on no fewer than seven occasions. Ireland now ranks in 19th position in terms of house price growth, above Germany, Austria and Switzerland.
Dubai saw prices rise 35 per cent during the 12 months of 2013, ahead of both China and Taiwan, who recorded the second and third-highest rates of growth: 28 per cent and 15 per cent respectively.
Knight Frank’s Head of International Residential Research Kate Everett-Allen notes: “Inevitable debates have ensued as to whether Dubai and Dublin are on the cusp of another bubble."
Indeed, mortgage caps were introduced at the end of last year in an attempt to curb speculative purchases in the housing market and avoid potential over-heating. Despite the worries, though, Dubai's mainstream prices remain 25 per cent below their 2008 peak.
“Cash buyers are driving sales and regulation is tighter with some purchase and ownership costs higher than in 2008. This follows Ireland’s introduction of a new local property tax in 2013 and transfer costs in Dubai doubling to 4 per cent during 2013," adds Everett-Allen.
The picture is equally positive for 2014 too: according to Knight Frank's Wealth Report 2014, the most rapid growth in demand for luxury property will come from China, Brazil, Turkey and Nigeria and the main target markets will be the US, the UK, Germany, Australia and, of course, Dubai.
Dubai's real estate values remain 25 per cent below their 2008 peak for now. If the trends continue as they have been for the last 12 months, though, that could one day be the other way around.