Dubai house prices are only 15 per cent short of their 2008 peak and will return to those pre-crisis highs within 18 months, consultant Jones Lang LaSalle (JLL) said on Monday.
The emirate outpaced all major property markets last year, with prices climbing more than 22 per cent as billions of dollars of government real estate projects triggered a buying binge among investors.
The fast growth, however, has raised concern about a potential repeat of the property market bubble that sent prices plunging by more than 50 per cent after the 2008 financial crisis.
“We are expecting prices to get very close to pre-crisis levels by the end of this year. It has already reached that level in some locations,” Craig Plumb, JLL’s head of research for Middle East and North Africa, said at a conference to release a report on trends in United Arab Emirates real estate.
“We are likely to be back to those levels in the next 18 months,” Plumb added.
The International Monetary Fund warned in January of a potential bubble if huge government projects are not executed carefully.
Investors, however, are more cautious and new government regulations to control speculative buying has reduced the risk of another bubble, the JLL report said.
JLL added that prices will continue to rise in 2014 but not as fast as last year.
Rents for newly leased homes in Dubai will grow in the range of 10 to 20 per cent, Plumb added.
JLL said that 27,000 new homes are due to be built in 2014 as developers complete projects that were shelved over the past few years.
“Not all will get built on time. So we can say at least 20,000 units will enter the market,” Plumb said.