Dubai’s Low-Budget Housing Registered a Price Growth
A Q1 report by international company of chartered surveyors and property consultants Cluttons states that prices of low-cost villas in Dubai have increased over the past half a year. According to the London-based firm, that is mainly due to the now higher confidence in the emirate’s residential property market.
In its report, the company informs that prices of higher-budget units is also increasing, but with a slower speed. The research has found that in a matter of six months prices on the higher-end of the residential market in Dubai have jumped with nearly 9%. In comparison, villas in the mid-range marked a price grow of almost 15%.
Similar is the situation on the apartment market in the emirate. Prices of mid-range and high-end apartments rose by an average of 10%, while those of low-budget ones increased with 14.6%. Landlords and real estate agents are pushing the prices and rentals up, but the consumer is not that eager to absorb the increase. There is no data about the current occupancy rates, but we also observe that many high-end units in primary areas of the city remain empty.
In the rental segment, low-cost residential market registered a massive jump of 12.7%. Rentals for higher end and mid-range market also grew by with only 6.4% and 7.7%, respectively. Still, this is somewhat of a phenomena in the Downtown Dubai, for example, where you can find plenty of empty luxury apartments. In particular, larger high-end units are now more difficult for leasing. From the over 42,000 units listed for rent on Dubizzle, about 330 are available for lease in the Downtown Dubai alone. Many of the recently completed units are yet to be handed to the owners.
According to the report, more and more tenants look for low-cost options because of the rising rental prices. That revived the low-budget residential market in Dubai which was not doing really well in the last couple of years. However, now many think that it is better to rent a 3 bedroom vila in Mirdif than 1 bedroom apartment in the Downtown Dubai.
Also, Cluttons claims that the general trend on the market is positive. That is due to the stable economy supported by the business and tourism sectors in the emirates.
The Head of the UAE department of Cluttons, Steven Morgan, explained to media that Dubai saw price rises of up to 20% over just a three-month period. He said that such situation may be regarded as a boom in other developed markets. Nevertheless, he warns that the market may overheat. Here we must take into consideration an eventual decrease during the traditionally slow for business summer months.
In its report, Cluttons also points that is Q1 2013 the property market in Dubai was somewhat chaotic. The company states that this was a result of the Central Bank’s announcement of a number of mortgage cap rates for both UAE citizens and expats who applied for mortgages of 60% and 50%, respectively. However, that issue is resolved by now.