Dubai real estate recovery is "gathering pace"
The group’s Middle East research shows that Dubai property prices are now 36.9 per cent above the market low in 2009 following the market crash, which saw values plummet by 50 per cent. Now, the emirate is firmly on the rebound, with values rising by almost one-third in the first half of 2013.
Demand is on the up too, which is in turn driving rental values higher: rates jumped 11.3 per cent in Dubai during the first six months of the year. That demand is also spilling over into Sharjah’s market, fuelling a rental increase of 7.1 per cent across the same period.
The recovering real estate sector has supported Dubai’s economy as well, with villa values rising 21 per cent in the second quarter of the year and apartment prices jumping 25.1 per cent in the same three months, almost double the rate of increase (13.4 per cent) recorded in the second quarter of 2012.
Indeed, the International Monetary Fund has raised concerns about the emirate overheating, but with values still 31 per cent below their 2008 peak, Cluttons remains far more positive in its assessment of the market.
“The increased level of job creation is translating into upward pressure on house prices and rental values, which is illustrated by the fact that capital values have risen by close to a third during the first six months of 2013. However these still remain 31% below the Q3 2008 market peak,” PropertyWire quotes the report, which highlights the factors behind growth are different to those five years ago.
“Dubai has benefitted tremendously from the Arab Spring and its perception as a safe haven for refugee funds from the broader Middle East region. Furthermore, there has been a rise in domestic demand, fuelled in part by favourable lending rates, which are encouraging a greater number of buyers to step into the market and also by the soaring rents, which are driving some tenants to consider the option of home ownership as a way to avoid being caught out by rising accommodation costs.”
Steve Morgan, Head of Cluttons Middle East adds: “The acceleration in residential capital values this year has been underpinned by robust levels of job creation and a rising population, rather than being fuelled by fly buy dealers, as was the case in the past. We are yet to see a definite solution on the matter, although this is less concerning than in 2008, given the increased number of end users in the market.”
He concludes: “The resounding success of Dubai residential so far this year should not come as a surprise given the magnitude of the correction recorded during the bottom of the market. We are still far off the previous peak, when growth was far more unsustainable.”
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