Thursday, October 23, 2008

Prices of Dubai villas surge 50 percent in two years

Villa prices in Dubai
The prices of villas in Dubai have sky-rocketed in the recent past. The last two years have seen an increase of 50 percent in the prices of villas. About 13,800 more villas are likely to hit the market within the next two years at various locations of the emirate, say experts.

Majority of these villas will be located in the Al Furjan development by Nakheel, while the others would come up in the Jumeirah Village, Waterfront, Dubai Silicon Oasis and Jumeirah Golf Estate.

Recent report by EFG-Hermes, titled "The Brave New World" states that the year 2008 has seen delivery of about 30,000 housing units so far, and another 50,000 are expected to be delivered by the year end.

The villas in Dubai that have already attained completion are the Springs, Emirates Hills, Arabian Ranches, Meadows, Jumeirah Island, The Lakes, and the Palm Jumeirah. The villa are classified into sub-categories, such as independent villas, townhouses, and signature villas, which has seen escalation in selling price by 50 percent during the last two years.

According to Vineet Kumar, the Head of Sales, Asteco Property Management, the prices of townhouses have risen by 45 to 65 percent during the past two years, while prices of luxury villas have escalated by 50 to 55 percent.

An Asteco research reveals that the prices of single to triple bedroom townhouses in Dubai, currently, are in the range of Dh.1.6mn to Dh.3.8mn. Signature villas of four to 12 bedrooms fall in the range of Dh.18mn to Dh.130mn.

A report by Colliers International reveals that the price increases are mainly contributed by the projects that are nearing completion. Colliers has recorded a 73 percent increase in villa prices during the second quarter of 2008, compared to same period last year. The townhouses have recorded 38 percent price increase during the second quarter of this year. The report indicated a 76 percent year-on-year increase during the same periods in residential prices in Dubai.

According to Asteco, although the past two years has seen a dearth of villas in the market, the coming years will narrow down this gap, through supply of several new developments such as The Villa in Dubailand, Veneto in Dubai, Waterfront, and Jumeirah Golf Estates.

Asteco feels that the current demand in the Dubai villa market is highest for mid-range villas which generate interest from both investors and end-users, as they are sold easily and return reasonable rentals.

The international buyers prefer waterfront or golf-course facing villas, but, on the whole, the villa market in the UAE and GCC markets have seen wide absorption. The villas have recorded strong demand from expatriates and the local population.

Premium on properties nearing completion have commanded higher premium than off-plan properties. The rental rates on villas in Dubai, too, have seen an increase of an average 30 percent.

Even the apartment prices in Dubai have risen by 83 percent during second quarter of this year, in comparison to same period last year.

Asteco, however, believes that UAE is witnessing an undersupply of affordable accommodation.

The current average prices of affordable apartments in Dubai are in the range of Dh.900 and Dh.1200 per square foot. The mid-range villas are priced in the range of Dh.1500 and Dh.2500 per square foot. Luxury apartments are priced in the range of Dh.3500 and Dh.14000 per square foot.

According to Kumar, based on the trend of regional and international demands, increased interest is seen among buyers for the mid-range products.

No comments: