Dubai's property prices see "unsustainable" growth

Dubai is enjoying "unsustainable price increases", JLL has warned.

London and Dubai are leading price growth in the high-end residential sector, boosted by international demand, according to the firm's latest Global Market Perspective, although there are early signs of cooling in both markets.

Dubai’s residential market is experiencing a "rapid recovery" in the third quarter of 2014, says JLL, with average residential prices having increased by more than 35 per cent in the year to June 2014. This growth, though, is unsustainable, says the firm, and the market has cooled significantly in the last quarter (with prices up 6 per cent).

Sales activity has also declined significantly in recent months, particularly for existing villas, where many owners are now reducing asking prices.

JLL adds that the apartment market has continued its growth run, with the tightest conditions apparent in the Gateway cities.

The report also notes that high-end residential sales have been subdued in most Asia Pacific markets, due to flat economic growth and policy restrictions. Nevertheless, volumes in Hong Kong have improved, partly due to relaxed conditions associated with the double stamp duty.

The strongest capital value growth during Q2 was recorded in Manila (+3 per cent). For H2 2014, sales in the high-end residential segment in the region are likely to remain at similar to levels as the last 12 months. Prices are expected to be stable in most markets this year, with small falls in Hong Kong, Singapore and Jakarta.