Apartment Prices in Dubai Registered a Promising Rise, Despite Growing Oversupply

0
675

downtownburjdubai-banner_tcm3-232Apartment prices in Dubai have jumped with 12% on the average during the period January – March of 2013. The rise was caused by the higher demand for real estates in the city’s main locations. This is the conclusion of the Asteco’s quarterly real estate report for Dubai.

The report has also found that the average year-on-year rise in the apartment prices in the emirate has reached 27%, although this in our views is applicable to a very few residential areas in Dubai. In comparison, villas have marked an increase of 21%. Other local real estate-focused consultancies observe that villa prices advance faster than apartments prices.

In addition, the rents in Dubai have also jumped further after Q4 2012, says the report. Apartment rents have increased by 3%, while those of villas – with 4%. The largest price jumps were made by apartments in Dubai Marina and Downtown Dubai. Prices of Dubai Marina apartment increased with 22% and those in Downtown Dubai – with 21%. Currently, the average price of a two-bedroom apartment in the these areas is between $27,000 and $34,000 (AED100,000 – AED125,000) per year. The increase of apartments in the Downtown Dubai is very much surprising given as a fact the tremendous currently released new supply. Although prices increased, rents remain nearly at the same levels as of in 2011. The availability of unoccupied units is tremendous, with a number of buildings almost empty. Yet, landlords and real estate agents are trying to maintain higher rentals.

However, according to the report, the biggest rise in asking price was seen with Discovery Gardens apartments. The increase there was equal to AED6,450 per square meter or over 30%. Apartments in Jumeirah Beach Residence and Dubai Marina also witnessed a jump in their asking price with AED12,400 and AED12,900 or 15% and 14%, respectively. However, no other areas in the city saw an increase in apartment asking price that was over 9%.

The situation with sales prices in Dubai for Q1 2013 was even more impressive. For only three months, sales prices have increased with 5% for villas and with 12% for apartments. As a result, the annual growth of sales prices in the region reached the massive 24% and 27% respectively, according to the report. This projection most likely does not take into consideration a traditionally slow summer season, when real estate prices and rentals decline by around 10% on average.

According to the report, these figures predict a positive outlook. Apartment rates and demand in Dubai are expected to grow even more, with the ever growing number of the expat population. Nevertheless, that will result in buyers and tenants being priced out of given communities or buildings sometime in the coming five years. At present, the number of available for rent apartments only on Dubizzle is higher than ever before in the past years and stands above 42,000 apartment units.

Atesco’s quarterly report also provides some information about Dubai’s commercial real estate sector during the first three months of 2013. The research has discovered that the office leasing sector saw both an annual and quarterly increase of 8% and 12%, respectively. If the numbers are accurate, this is a truly positive development for the economy.

Also, companies were found to have been mainly interested in affordable developments in areas like Tecom C and Jumeirah Lakes Towers. That is because of the improved state of the internal infrastructure.

Another interesting finding of the real estate report is that landlords have made deals more attractive by offering fully fitted office space. In addition, there was a higher demand for bigger floor plates during Q1 2013 due to the consolidation of some multinational firms in Dubai.

However, the office sales registered a 2% fall. According to Atesco’s report, that was due to the fact that companies were not willing to make big capital expenditures.

LEAVE A REPLY

Please enter your comment!
Please enter your name here