Dubais real estate market is showing no signs of slowing down, as prices continue to climb and developers keep rolling out new projects.
Fuelled by an influx of buyers from areas affected by regional turmoil and increased market confidence, sale prices for apartments in the emirate jumped 38 per cent over the past 12 months, while villa prices have risen 24 per cent over the same period, according to a report released this week by property management company Asteco.
Price rises for apartments varied greatly by neighbourhood, with Discovery Gardens leading the way with a 75 per cent increase over the past year to AED7,550 ($2,056) per square metre.
In terms of villas, the biggest price growth was seen in Jumeirah Village, which saw a rise of 40 per cent over the past year to AED8,100 per square metre.
Sale prices should continue to rise as market confidence picks up in parallel with the improving economy, particularly for villas from aspiring owner-occupiers, that want to jump on to the property ladder, said John Stevens, Astecos managing director.
The emirates rental market has also fared very well, with average apartment and villa rents up 20 per cent and 17 per cent respectively over the past 12 months, the report added.
The steepest growth in rental rates was in International City, where a lease for a two-bedroom unit increased 27 per cent year-on-year to an average of AED42,500. In Dubai Marina, rents have risen 20 per cent over the past year to AED110,000 a year on average.
While mostly providing a positive outlook on the market, the report also cautioned that as rents continue to rise across the emirate, some residents will be priced out of established communities and may opt to relocate to more budget-friendly cities in the UAE.
The report also noted that new projects have been rolled out almost on a weekly basis, as developers look to tap rising demand for property in the emirate. Among the major projects announced so far this year was Meydan Group saying it was teaming up with Sobha Group of India to build 1,500 villas as part of the multibillion-dollar Mohammed bin Rashid City project. Emaar Properties and Meraas Holding have also announced a joint venture to build a golf course and residences at MBR City.
The renewed confidence in the market is also helping to boost the profits of the emirates developers. Dubai-based Nakheel reported an increase of 36 per cent in its net profits to AED491m in the first quarter of this year, compared with AED362m the same period last year. Proclaiming that new unit handovers were a key to its increased profits, the developer said it delivered about 770 homes in the first quarter.