Both buyers and investors are showing keep interest in Dubai’s Marina area, pushing the market there into the black – and the region into centrestage.
Dubai’s property prices rose 22% in the year to November 2013, rising 2.44% month-on-month from October to November. An operative in the area, Michael Lahyani, CEO of PropertyFinder, observed that, ‘Dubai’s property market has clearly rebounded… as new projects get started every other week,’ and Mr. Lahyani went on to say that home prices were at their highest since the downturn, predicting that ‘real estate demand is only likely to inch higher.’
However, Dubai’s property market has exhibited rollercoaster-like characteristics in the past and overconfidence has been a hallmark since the first foundation was laid. Not this time, according to PropertyFinder’s managing director, Renan Bourdeau. The current rise has a solid economic basis in tourism and trade, and the steepest rises have been in Business Bay, Jumeirah Village Circle and Dubai Sports City.
Legislation has changed too, and some commentators say that the UAE Central Bank’s mortgage cap and the doubling of property registration fees are indications that the market is better regulated, less likely to overheat and more immune to speculation and bubbles.
Dubai’s rental restrictions have been eased too: formerly, rents were permitted to rise by 5% only if they were 26% below market value. Now they will be permitted a % rise if they are 11% below market value. Rents have not risen in step with prices: apartment prices rose by 2.9% month on month in November while rents rose only 1.37% in the same period, indicating a lag.
Dubai isn’t just outperforming the rest of the world, it’s outperforming its UEA neighbours too. Abu Dhabi saw prices rise 19.7% year on year, a small but significant gap. The biggest difference, though, was in what properties were experiencing price rises.
Abu Dhabi’s villa prices rose by 16.5% in the year to November 2013; meanwhile Dubai’s villa prices rose 14.9%, so the balance is tilted in favour of luxury property in Abu Dhabi, indicating the kind of boom in luxury housing that’s driven by second home buying and speculation rather than the apartment and house sales that indicate professionals moving to the area and revitalising its economy.
Mr. Lahyani explained that the relaxed rental controls could result in a stabler rental market too, ‘as more landlords content with rental returns in the long run would mean fewer reasons for them to make a quick buck by evicting tenants.’
Dubai also stands to benefit from an influx of visitors, professionals and investors caused by the upcoming Expo 2020, meaning that the boost to the area’s prices could be a long term trend, as Mr. Lahnyahi believes.
On the other hand, the IMF has raised its 2014 growth forecast for the UAE to 4.5%, but also warned the Emirates authorities of the risk of another property bubble. Harald Finger, IMF mission chief, warned that while growth should be aided by a number of megaprojects, ‘if not implemented prudently, these projects could exacerbate the risk of a real estate bubble.’ That risk should be reduced by increases in non-oil economic activity in the Emirates, as the area’s oil income remains steady amid ample global supply.
Source Article: http://www.propertywire.com/news/middle-east/dubai-real-estate-searches-2014010088646.html