Property prices in Dubai have risen almost 18 per cent in the third quarter of this year, compared to Q3 2012, according to a new report by property consultant Jones Lang LaSalle (JLL).
The Reiden Residential Sale Index grew six per cent quarter on quarter but remains 15 per cent lower than its peak value, said the report.
Villa prices rose 14 per cent year on year, while apartment prices were up 15 per cent, said the report.
“Despite the government’s initiatives to prevent a bubble, the dominance of cash buyers could lead to a period of unsustainable growth in prices,” said JLL.
Prices are expected to go up even further warned property developer Asteco in its Q3 report last week. Property prices have already risen by up to 42 per cent in the past year, but remain 42 per cent below peak levels witnessed in Q3 2008, it said.
Prices will continue to rise until a certain price point is reached, explained Nicholas Maclean, head of CBRE Middle East.
Speaking on the sidelines of Cityscape Global, he said: “I think the correct price point will be below 2008 levels. One of Dubai’s competitive advantages is pricing. The other is HR – it’s easier to recruit here and the quality of people here is extremely high but those people have to afford to live here.
“There will be a natural price point where the market allows those people to live and work here, but we haven’t reached that yet. I think the government is keen that we don’t reach it too quickly and hence they are proposing regulatory framework to increase confidence in the market and prevent speculation.”
Steven Morgan, CEO Middle East at Cluttons added: “I think the levels of increase that we have seen are sustainable. But in another six months, if we have seen another 20 per cent increase, that’s a very real concern. I think the market will settle and we will see increases but much more realistic ones that you see elsewhere in the world.”
However, rates will not increase further, said Ali Rashid Lootah, chairman of Nakheel Properties.
“Prices are stabilised now and will not rise further,” he told Gulf Business during Cityscape, as the developer launched three new projects: The Boardwalk and West Beach Development at The Palm and the new Deira Project.
A similar sentiment was shared by PNC Menon, the founder and chairman of Sobha Group.
“Post-2008, property prices crashed between 50 to 60 per cent. So it’s only a partial recovery that’s happened now. The current prices are reasonable, and I don’t expect them to go up any further.
“We are in a very stable and attractive market,” he said.