The real estate report for the Dubai market for Q4 2010 by Cluttons, the London-based property broker, revealed that the investors seem more confident about the Dubai real estate market now, particularly in certain locations. Moreover, with the re-emergence of major lenders such as Tamweel, one of the largest Islamic mortgage lenders, who have been offering attractive rates to credit-worthy clients seeking to purchase quality stock, investors are showing increased confidence.
However, the Cluttons reported that the residential sector in Dubai recorded a fall in prices by 5.1% during fourth quarter of 2010, in comparison to that of previous three months. The prices of villa dropped 5.1percent, while those of apartments dropped 2.4percent in the fourth quarter, in comparison to that of third quarter.
According to Cluttons, about 35,000 new homes will be ready in Dubai within next two years. But, with increased supply, drop in values will be inevitable. But there is increased demand for quality homes, as sales and rental markets in good locations are getting more affordable.
The lifestyle projects, including the Old Town, Palm Jumeirah, Dubai Marina, The Meadows, and The Greens are continuing to be more resilient in both sales and leasing market. With the buyers now being able to afford quality homes in better locations, the reputation of Dubai real estate market is growing, according to Cluttons report.
As for the commercial sector, with the current construction and completion of commercial projects within Jumeirah Lake Towers (JLT), Business Bay, Tecom, Business Bay and Silicon Oasis, there is a downward pressure on rents in most areas of the city. Localities such as Deira, Bur Dubai and Sheikh Zayed Road are maintaining healthier levels.
Pointing out to the migration of multinationalss such as Merck Serono, the Swiss pharmaceutical giant, Cluttons says that this is an encouraging trend as Dubai's affordability has begun to make an impact.
However, the decline in office rents will continue as long as fresh supplies keep flowing into the market. The commercial rents dropped 9% on an average over the past quarter, with Tecom and DIFC being the only exceptions, the report said.