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Average residential sales prices in Dubai were up 60 per cent ear-on-year in the fourth quarter, with quality residential developments among the top performers, according to a report by Asteco Property Management. Dubai's leasing market was no less impressive, with an average increase in apartment and villa rental values of close to 50 per cent and 20 per cent respectively.
"Sales prices for apartments and villas rose by 23 per cent in the fourth quarter alone, fuelled by increased confidence and the fact that the new law regulating maximum loan-to-value was not being consistently enforced, although cash buyers still dominated,” said John Stevens, Managing Director of Asteco.
"Owner occupiers and investors were keen to enter the market as rental rates were on an upward trend, which indicated better returns and potential for capital appreciation in the medium term."
The areas that came out on top for villa sales year-on-year were Palm Jumeirah, which jumped 67 per cent to reach Dh3,000 per sqft, and Jumeirah Village Circle, which rose 55 per cent to Dh850 per sq ft. The rest of the freehold markets grew between 22 per cent and 30 per cent.
Apartment sales price
In terms of apartment sales prices, Discovery Gardens increased by 83 per cent to Dh825 per sq ft, followed closely by Dubai Marina with a growth of 81 per cent to Dh1,900 per sq ft and Downtown Dubai, which recorded a 69 per cent increase to Dh2,200 per sq ft.
"We anticipate that this year will see a continuation of the trend witnessed in the previous year, with sales prices increasing, albeit at a slower pace, as approximately 25,000 residential units are forecast for completion this year," said Stevens.
The residential leasing market also witnessed significant growth across all developments researched, with average prices up by 22 per cent for apartments and 6 per cent for villas in the fourth quarter.
Rental growth was driven in part by continued unrest in some parts of the region, Dubai's winning World Expo 2020 bid and an expanding economy. New road networks and facilities such as parks, retail, health clinics and schools have also created more demand for previously unpopular communities.
The highest growth rates for villas were in Mirdif, where average prices for three-bedroom units increased 40 per cent to Dh140,000 per annum. Villa rental prices at Arabian Ranches rose an average of 30 per cent to Dh215,000 per annum for a three-bedroom house. The most expensive area remains the Palm Jumeirah, where a three-bedroom villa costs Dh350,000 per annum on average.
Apartment rental rates grew most in International City, increasing per cent on average to Dh45,000 annually for a one-bedroom unit. Jumeirah Lakes Towers followed with a growth of 50 per cent, as a one-bedroom apartment is now being leased out for up to Dh95,000 per annum. Discovery Gardens rates grew by 44 per cent, with a one-bedroom flat now costing Dh75,000 per annum.
In contrast to the residential market, the commercial market saw little movement last year. However, Asteco believes the market has bottomed out and expects to see some growth over the short to medium term, especially for single-owned and managed buildings.
Source: Property Weekly