News | UAE

Sponsored By

It’s real, realty prices are up in Dubai

Dubai’s real estate sector is on an upswing and this time the growth is based on solid fundamentals, say experts

  • By Anjana Kumar, Staff Reporter
  • Published: 22:53 January 2, 2013
  • XPRESS

  • Image Credit: Gulf News Archives
  • The residential market is on the recovery path, according to experts

Dubai: When Rajesh Singhvi listed his five-bedroom villa in The Meadows for sale two months back he thought Dh5.2 million would be a decent price. Today he is about to close the deal — at Dh5.5 million.

“I decided to hold on and see how far I could go. Now I have found a buyer for Dh5.5 million,” said Singhvi.

It’s the same story elsewhere too. As the market picks up, property owners are getting pricey.

A four-bedroom villa in Arabian Ranches is selling for Dh5.2 million, a three-bedroom villa in The Springs is going for Dh2.4 million and a three-bedroom apartment in Palm Jumeirah is fetching Dh2.3 million.

So are we back to 2007-2008 prices?

“In some areas we are back to late 2007, early 2008 prices. But this is not the case everywhere. Prices in the current market are ‘real’ and the properties are worth the value they are selling for,” said Renan Bourdeau, Managing Director, Propertyfinder.ae.

According to Bourdeau, Palm, Marina, Downtown, Jumeirah Park are the main areas experiencing increases. “Average return on investment (ROI) in these properties is around eight per cent. Confidence has returned to the market and we’ve seen more expats moving back to the region,” he said.

The average ROI for properties hovers between six and seven per cent, touching eight per cent in some areas.

According to a report by Jones Lang LaSalle — Dubai Real Estate Market Overview Q3 2012, overall residential prices increased 14 per cent year-on-year (Y-o-Y). Villa prices shot up 23 per cent (18 per cent higher than 2008 prices). Apartment prices increased four per cent, but were however 18 per cent less than peak 2008 prices.

“The residential market appears to be on a clear recovery path with both sale indices and rental indices improving. Major improvements remain more noticeable in primary locations. Lower quality buildings in secondary and less completed locations are the ones suffering as tenants are constantly upgrading to better quality projects,” says the report.

Manoj Gur of Blue Water Real Estate said: “Price increases today are not a result of speculative selling. They are healthy and recording natural growth. Prices today are no way like what we saw in 2007 - 2008. Today it is driven by genuine demand from end-users, a sign of a maturing market. Many long-term investors too are back as they have realised the positivity in the property scene. Strong rules and regulations from Rera especially on off-plan properties is further ensuring the right support is being given to property buyers.”

Craig Plumb, Head of Research at Jones Lang LaSalle, added: “Improved sentiment, stronger economy and employment growth are key factors pushing demand. Banks are keen to provide mortgage finance to end users, furthering the demand to buy properties. Completed projects in established communities with facilities are seeing a price rise.

“Most buyers are end-users wishing to live in the property, with continued demand from second home buyers looking at Dubai since it is a politically safe and stable destination. Many of these are long-term investors that are being attracted to Dubai’s real estate market.”

Mohanad Al Wadiya, Managing Director of Harbor Real Estate, said there has been significant movement in values in certain areas. “Villas, especially in The Villa Project, Arabian Ranches, Victory Heights, The Springs, The Lakes and the Meadows recorded 10 per cent to 25 per cent Y-o-Y capital appreciation.

“In apartments, Palm Jumeirah, Downtown Dubai, Dubai Marina and the Greens recorded an increase of 5 per cent to 15 per cent y-o-y increase,” he said.

Al Wadiya emphasised that the price rise is not superficial. “There are always three essential ingredients for any real estate market to grow effectively. They are the 3C’s - capital, confidence and clarity. The relationship between them can either be positive or negative. The good news today is that they are on the rise.”

”There is a significant capital infusion into the real estate sector from a number of sources. Creditors such as banks have been more willing to lend cash as the world and local economies are returning to a semblance of growth. Lawmakers in Dubai have been working hard to address the issues of transparency in the sector. Therefore, there is nothing superficial about prices. They are being driven by fundamental market factors of supply and demand.”

Mortgage

Many financial institutions are revving up their mortgage portfolios with some offering rates as low as 3.99 per cent. LTV ratios, however, have been reduced from 85 per cent to 50 per cent. 

Expected residential completion in 2013
  • Dubai Silicon Oasis – 734 units
  • Dubai Marina – 1,309 units
  • Jumeirah Village – 1,773 units
  • Dubailand – 1,030 units
  • Dubai Sports City – 1,541 units
     

Comments (4)

Your comments
  1. Added 13:06 January 3, 2013

    'It's real realty prices are up in DUBAI' So you think people are happy with it??? Please note I already received e-mail from our chairman stating just like last year there will be no increment this year as the usiness is not going well. So it's very difficult to pay the increased rent . I am in such a state can't quit nor look for new job, and you see it's progress???

    Ceraj, Dubai, United Arab Emirates

  2. Added 11:52 January 3, 2013

    LTV ratios, however, have been reduced from 85 per cent to 50 per cent: This is a major change since most of the expats won't be able to buy houses anymore... It is never a good signal when you have to give an audi R8 to sell an apartement (DAMAC offer)

    Seb, DUBAI, United Arab Emirates

  3. Added 07:53 January 3, 2013

    No matter how much you try to boost the reality about the Real Estate market, it is not getting any better at all and now with the LTV reduced to 50% expect a major drop in prices as there will be no more buyers. Who have this kind of cash these days? It seems that there is a direction to boost the Real Estate Rent market and this is evident in the recent laws applied in Abu Dhabi that will affect the rent market. The new CB rule regarding reducing the LTV value to 50% will affect it as well. This means that no one wants speculators and opportunists to drive the Real Estate Market up in a time of uncertainity because this will drive inflation. Everyone wants stable and reasonable market value and a focus on the Rent Market which is safer for property owners at the present time.

    Wissam, Abu Dhabi, United Arab Emirates

  4. Added 00:47 January 3, 2013

    So are we back to 2007-2008 prices? Maybe.. but certainly not for long since the Central Bank just issued a ruling setting a cap of mortgages at 50% of property value for expatriates. It's just a matter of time still there's less demand (due to the lack of affordability) and we're back to square one!

    Louis Miles, Dubai, United Arab Emirates

XPRESS
Talk of US retreat from global duties is nonsense

Beyond Words

Illustrations that speak a thousand words

NAT_140419_PEACE_CONVENTION
The first smart peace dome in the world during the Dubai International Peace Convention 2014 held at the Dubai World Trade Centre ? PHOTO Zarina Fernandes/ Gulf News

Picture Speak

Gulf News lensmen capture myriad shades of life

Blog: Health Matters

Experts address all your health concerns

Blog: Frame by Frame

This is a place for opinions on all visual media

Blog: Notes

We talk all things music, from banal to esoteric

Community Reports

More from Community Reports

Quick Links

  1. Business

  2. Sport

  3. The latest Entertainment news

  4. The latest Lifestyle stories

  5. Opinion

Gulf Country Finder

  1. The latest news from the UAE

  2. Saudi Arabia

  3. Qatar

  4. Bahrain

  5. Oman

  6. Kuwait

  7. Yemen

Region Country Finder

  1. Syria

  2. Palestinian territories

  3. Jordan

  4. Lebanon

  5. Iran

  6. Iraq

  7. Egypt

Influencers

  1. United States of America

  2. India

  3. Pakistan

  4. United Kingdom

Regions

  1. Gulf

  2. Region

  3. The latest news from around the world