Tuesday, October 07, 2014

Dubai property market, now on a more stable & sustainable growth path

The real estate market in Dubai is showing signs of sensible and sustainable growth with residential property being the most prominent sector. This is, as revealed by the Capital Club, Dubai’s premier private City Club and member of ENSHAA group of companies, together with ENSHAA PSC, the premium quality project developer and lead hospitality service provider.

The panels discussed the short to medium term situation in Dubai property market and revealed that although there has been considerable growth over the past two years, the rate of growth has levelled to a sustainable level in the second quarter of this year.

The ENSHAA PSC CEO, Raza Jafar, said that the Dubai market holds a great deal of potential, particularly when considering its position in comparison to other major international cities.

Dubai’s position as a global financial hub is well-established when combined with the strength of its infrastructure and the quality projects being delivered in its property sector. Therefore, it is now on par with any other international hub like London, New York, Singapore, Shanghai, or Sydney.
Dubai also offer excellent earning opportunities to its residents due to its no-tax policy. Therefore, the current generation with their disposable income have the opportunity to build-up real estate assets here.

He further emphasized that Dubai prime real estate is now priced at one-tenth the price in London, about one-seventh of New York and about a quarter of that in Singapore, which indicates the opportunities that are open for both local end-users and international investors.

With these sentiments, recently the JLL Dubai Property Market Report was released, and when Craig Plumb, the JLL CEO said that the market is on the rise in Dubai, with the residential sector in particular, being the star performer.

The average prices in this sector have growth by 64 percent over the last two years. The market still continues to grow and is almost at the top now. The prices are still going up and now, the growth has become more sustainable, which implies that the market has seemed to gain some stability.

Craig Plumb further noted that although there have been a lot of new launches, majority of the projects are still in the launch phase and not scheduled to hit the market any time soon.

Further according to data available 15000 to 20000 units being added to market each year. Taking into account the total supply of housing units in Dubai is just below 400,000, it implies that the increase in supply is only around 5 percent, which is a sustainable figure when considering Dubai’s constant population growth.

According to the panel, although there would be an increase in supply over the next few years, the demand in residential sector will still outstrip supply, and hence prices in residential sector are unlikely to dip.

Further, majority of smaller developers have shifted their focus from wholesale and are not selling ‘off plan’ properties, unless these sales are to cover mortages of actual end-users. The market is more stable now, and the smaller non-governmental developers are now more sensible about how they approach new projects, which works well for its growth in the long-term, said Andrew Chambers, CEO of GGICO Properties.

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