Dubai’s residential property market witnessed a recovery in 2012 with average rents and prices increasing during the year, says a new report released by real estate consultancy Jones Lang LaSalle (JLL).
Rents in the emirate increased seven per cent year-on-year, as per the REIDIN rental index, with villa rents rising six per cent, two per cent higher than the peak level.
The apartment rental index increased seven per cent year-on-year but remains 26 per cent lower than January 2009.
“Rental increases in the most demanded areas such as Burj Downtown, Dubai Marina and, Palm Jumeirah have been counterbalanced by declines in secondary and less completed locations,” JLL said.
Residential sale prices recorded a better performance, with the REIDIN sales index increasing 19 per cent year-on-year.
Villa prices rose 24 per cent in 2012 and are now 21 per cent higher than in January 2008. Apartment prices also rose 12 per cent last year but remain 12 per cent less than in January 2008.
“While this positive trend is expected to continue in 2013, it will remain however more noticeable in prime assets in established communities,” said the report.
“The biggest danger facing the market in 2013 is that confidence will again run ahead of end user demand, resulting in unsustainable growth in asking prices / rents and exacerbating the over supply situation that characterises many parts of the market,” it added.
However, the recent guidelines issued by the UAE Central Bank to limit mortgages to expatriates at 50 per cent of the property’s value and to Emiratis at 70 per cent of the property’s value will shrink demand, said JLL.
“The new guidelines are likely to reduce demand in the residential sector and slow the recovery of prices in 2013,” it said.
The report also found that at the end of 2012, the total residential stock in Dubai stood at around 354,500 units.
Around 12,500 residential units were completed during 2012, 14 per cent less than completions in 2011 and 72 per cent less than in 2010 because of project delays.
More than 45,000 additional residential units are scheduled to enter the market over the next two years and most of the stock will be located outside central Dubai, said JLL.
“It is however likely that not all of this space will be delivered within this timeframe. With demand picking up, a number of previously stalled projects are now resuming while new developments are being announced,” said the report.