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Dubai’s residential realty sector is passing through fascinating times. Some top drivers seem to pave the path for it. There have been speculations of another property bubble ensuing from the unreasonable increase in prices in the residential market. However, JLL observations point towards some differences this time in terms of cautious but interested investors, further property reforms, fresh supply, massive property developments being phased in line with demand, and little reliance on pre-sales and sub-developers. These factors, indeed, make for a better market.
According to JLL’s Q1 2014 report on Dubai’s real estate market, the residential market has maintained its momentum with average prices increasing 33% YoY and average rents improving by 23% YoY. This indicates that still the market has not reached its 2008 peak in most locations in comparison to some areas. However, the price hike will be a continuous phenomenon in 2014, but at a slower rate.
In fact, in prime residential locations like Downtown Dubai and Dubai Marina, rentals increased by 24% and 21%, respectively in Q1. Additionally, it saw the recovery in rentals for secondary locations like Dubai Sports City (41%) and Discovery Gardens (33%).
The trend of equity, REITs and IPOs are gaining momentum for real estate capital funding. The JLL’s Q1 report also lays emphasis on the same.
In the event of increased tourism in the city, investments in the hotel sector are also escalating, and the sector is performing very well. The occupancy rates went up to 88% in Q1, and the average daily rates soared up to USD298.
Dubai is leading in sustainability-based projects in the realty sector, too. It will be shortly implementing regulations for new developments to obtain LEED certifications. This is a significant step towards constructing green buildings. In addition, with the introduction of international property measurement standards (IPMS) from April 2014 onwards, the realty market is more regulated resulting in unified measurement standards.
• Strong performances in residential, hotel sectors keep realty market strong
• Property reforms, phased projects are the brighter side of the realty sector
• IPOs, REITs, sustainability and IPMS seem to give a boost to the realty market
Source: Arva Shikari, Special to Properties
The writer is a freelancer