The real estate prices of luxury villas in Dubai have recorded their second biggest jump, only next to Jakarta, based on statistics from Knight-Frank, leading UK-based real estate consultant.
The prices of luxury villas in Dubai have grown 20% in September 2012, since September 2011, and have recorded 3% increase over the past quarter.
According to Knight Frank, cities such as Dubai are increasingly considered as investment hubs for high net-worth individuals in their wider regions, turning them into investment magnets. Dubai, in the wake of Arab Spring, is being considered as a relatively safe haven for buyers in MENA region.
This news is aptly timed, as the property sector in Dubai has now bounced back, although analysts suggest that there is still reason to worry, as the ambitious private developers of the emirate may enter into another debt-fuelled building spree.
For now, the emirate is enjoying the return of economic confidence, with the Dubai economy expected to grow 4.5% in real GDP this year, as the retail, transportation and tourism makes headway.
Meanwhile, the real estate consultants Jones Lang LaSalle (JLL) seconds Knight Frank's findings. JLL agrees that the overall residential market has seen another positive quarter, with villa sector continuing to outperform the apartments in third quarter this year.
Prime residential buildings in established locations are continuing to witness improved performance, although secondary locations are still facing the brunt of rental and pricing declines, as tenants relocate to new high quality projects.
Pointing out to REIDIN residential sale indices, JLL states that overall residential market has seen average increase in prices by 14% year-on-year in August 2012.
The JLL analysts are confident that the residential market in Dubai is on a clear recovery path with both sale indices and rental indices improving in Q3. However, major improvements are largely in prime locations, while lower quality buildings in secondary locations continue to suffer, with tenants moving on to better quality projects.
Meanwhile, Fitch Ratings have also reported that Dubai’s prime retail and hospitality has been vigorous in 2012, and the sector is expected to do well in 2013.
Further, Dubai has benefitted from being the preferred investment home for "refugee capital". Analysts suggest that expats from other troubled neighbouring emirates such as Pakistan, Afghanistan, Iran, Lebanon, Syria and CIS states are contributing to improvement in Dubai realty market.
Although it is heartening to see the rebound of Dubai property market, there is still a long way to go before confirming recovery. The residential real estate sector has dropped 60% from its peak 2008 levels, and several real estate companies are yet to regain their composure.