The real estate prices in Dubai is on the growth path, and is now among the fastest growing in the world, and best in 23 cities, as tracked by real estate consultant, Frank Knight.
The luxury residential real estate prices grew 4% during the first quarter this year in Dubai, said the UK-based consultancy Knight Frank. This is a huge reversal, following drop in residential prices in the emirate following global financial crisis in 2008.
In fact, Dubai’s 4% growth was the best amongst 23 cities tracked by Knight Frank in its quarterly survey this year.
The quarterly index by Knight Frank showed that value of prime properties in major cities fell by 0.4% during the first quarter. Manhattan witnessed a 4% decline, while Shanghai fell 3.2%, reflecting slowdown in the U.S and Chinese markets.
According to Knight Frank, the 4% growth in Dubai in 2012 follows the 2.3% rise during last quarter of 2011, indicating a sustainable recovery. However, there is a long way to go, as the property prices had fallen considerably over the last couple of years, and analysts are of the opinion that there is more pain on the way for the real estate market of the emirate, with new supplies underway.
The residential market in Dubai is likely to see 30,000 to 35,000 new apartments and villas from mid-2011 until 2013, on top of the existing supply base of 322,000 units. This reflects 10% incremental supply, which may depress real estate asset values, said Rasmala analysts, in their note early this year.
Although prices are just 0.3% higher on yearly basis, the Dubai economy has been showing signs of improvement over the past year, with growth in tourism, retail and services sector. Dubai Inc. has been working its way through its massive debt pile, and businesses and investors are gaining confidence.
According to Dubai Land Department, the total residential unit transactions during the first quarter of this year were Dh.3.1bn, marking 9% increase in comparison to previous quarter.
Apart from high-end luxury market, other prime spots witnessing an increase are Jumeirah Beach Residence, wherein rentals have grown 20percent in a year, according to Harbour Real Estate data.
However, despite drop from peak level values in Q3 2008, the villa market saw a growth towards end of 2011, and this trend continued in 2012 too, with sales indices 3% higher than during January 2008, said a Jones Lang LaSalle (JLL) in its report. But, villa sales are still 25% lower than their peak in Q3 2008.
Dubai is likely to see completion of 28,000 new units this year, with 4,380 and 4,242 new units in Dubailand and Jumeirah Park respectively, followed by additional supply in Dubai Marina, Jumeirah Village, Dubai Silicon Oasis, and International City. The 44% of residential stock added during the first quarter will be located within submarkets of Dubai Marina, International City, Jumeirah Lakes Towers, Discovery Gardens and Dubailand.
Now, with liquidity is returning to residential market, some stalled projects are recommencing, with substantial proportion of supply likely to enter the market this year.
According to JLL, Reidin Residential Sale Indices, the residential market in Dubai seems to have bottomed out, with prices currently at 2008 levels. The villa market too began to see an upward trend towards end of 2011. This trend has continued into 2012, and sales indices in Dubai, now stand 3 percent higher, than in January 2008, the report said.