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Dubai: The current upturn is rippling through all layers of Dubai’s property market so much so that the biggest gains are now being recorded by mid-tier freehold communities. That is why apartment values in Discovery Gardens were up 83 per cent last year and overtaking the gains posted at Dubai Marina and Downtown Burj, according to an Asteco report.
Another way of looking at it is that the while the initial phase of the upturn — in 2012 and the early part of last year — lifted the high-end clusters, it is becoming quite broad-based now. Discovery Gardens’ units are averaging Dh750-825 a square foot.
The lifting of the rental cap by Dubai has also diverted a lot of attention towards the mid-tier residential neighbourhoods. Conversely, rental locations once deemed accessible are no longer so as more tenants are finding to their cost.
According to the Asteco report, rental gains were the sharpest in Discovery Gardens and International City, gaining 26 per cent and 34 per cent respectively. In comparison, leases in Dubai Marina and Palm Jumeirah were up by 10 and 14 per cent, though - of course - on a much higher base.
“Owner-occupiers and investors were keen to enter as rental rates were on an upward trend, which indicated better returns and potential for capital appreciation in the medium term,” John Stevens, managing director at Asteco Property Management, said. Property values in Dubai were up 23 per cent in the fourth quarter of 2013 compared with a quarter before. On a year-on-year basis, the value spike is more than 6 per cent.
Apartment sales prices and percentage change
Price increases have been sharp at locations falling on either side of the Shaikh Mohammad Bin Zayed Toad, helped in no small measure by the completion of road and other essential infrastructure. Arabian Ranches is seeing a lot of new stock releases.
Also, “Locations such as Dubai Silicon Oasis and Dubai Sports City have benefitted, with a one-bedroom unit upwards of Dh700,000-Dh750,000 after gaining 20 per cent plus in 2013,” Samir Munshi, managing director at the property investment firm Orion Holdings, said. “Definitely, the rent cap removal has come to the aid of both, more so as completed towers in Dubai Sports City are turning out 90 per cent occupancy almost instantly.
“From an affordable investment perspective, apartments in Jumeirah Village are also gaining and now quoting at Dh600,000 plus.”
For this year, the Asteco report suggests an additional 25,000 homes will be completed, many of these being at the Dubailand development along the Dubai-Al Ain highway.
But more supply need not necessarily end up subduing the kind of asking rates - for selling and renting - Dubai is witness to now. A silver lining of sorts would be that the increases would not be as high as last year’s.
Source: Manoj Nair, Associate Editor, Gulfnews.com