Dubai real estate keeps shining

(MENAFN- Khaleej Times) Prime residential prices in Dubai, which started to rise in early 2012, a movement partly instigated by regional troubles, recorded a double-digit surge in 2013, with the price of luxury villas increasing by 11.4 per cent and that of prime apartments by 15.1 per cent in value, a leading global property consultant Knight Frank said on Wednesday. The prime property sector recorded a 21.4 per cent year-on-year increase from June last year on the back of rising demand from investors in Mena and Asia region looking to place wealth in a safe-haven environment, Khawar Khan, research manager at Knight Frank said. Rents of prime property units also recorded a growth of 15 per cent year-on-year as an increasing number of corporate tenants entered the markets. "The Dubai real estate market showed the first firm signs of recovery in early 2012 but this was not across all sectors. Leading the way were the popular family communities, particularly established villa developments with good amenities. Better quality apartments were to follow suit, particularly in Dubai Marina, Downtown and Palm Jumeirah, with an emphasis on high maintenance standards and prime locations," said Khan. "There is a definite focus on quality by buyers, which is now recognised clearly by developers. With the resurgence of Dubai real estate has come a more acute awareness of trust, reputation and the ability of developers to deliver a high quality product," Khan pointed out. The price of luxury villas picked up post January 2012, whilst the price of top-end apartments gained momentum from September 2012 onwards. According to Khan, Dubai, which is considered a relative "safe-haven", has primarily been a draw for Middle Eastern investors worried about political unrest at home. However, Europeans experiencing fiscal turmoil and heavy taxation in their own countries have also returned to the market. "Between June 2012 and June 2013, the price of prime residential developments in Dubai increased by21.4 per cent, with villa prices the first to rise, and apartments following in late 2012. Not all sectors of the property market have witnessed this level of recovery; it is predominantly the more established, popular and well maintained developments €" where demand remains high - which have done well. Furthermore, prices in some prime developments, such as Palm Jumeirah and Emirates Hills, are nearing their 2008 peaks," he explained. Khan observed that Dubai's well performing economy, and expanding business environment, has led to an influx of expatriates over the past year. That in turn helped to push up prime rents by 15 per cent in the 12 months to June 2013. Since government laws prevent landlords from hiking up rents at the end of a tenancy contract, the double-digit rise in rents is as a result of new tenancy contracts being signed by new arrivals and residents relocating." According Knight Frank, the rapid rise in prime property prices not only caught the attention of investors but also of the UAE Central Bank, who proposed a new mortgage cap in December 2012. "While nothing has been ratified to date, the prospect of its introduction has caused a surge in end-user buyers seeking loan approvals to buy property. The last 12 months witnessed a number of "off-plan" project launches, of which select developers were able to sell-out on the day of release. However, most of these projects will complete after 2015, some in part-established developments and others in new areas. The most notable of these is Mohammed bin Rashid City - a mega-project near the heart of the city." The independent consultancy observed that buyer nationalities remained similar to the market peak, with Indians taking first spot.