Average sales prices rose by up to 60 percent in prime residential developments in Dubai last year, according to a new report by Asteco.
The real estate consultancy also reported an average increase in rents of between 50-60 percent across all residential apartments and villas in the emirate.
“Sales prices for apartments and villas rose by 23 percent in Q4 2013 alone, fuelled by increased confidence and the fact that the new law regulating maximum LTVs (loan-to-values) was not being consistently enforced, although cash buyers still dominated,” said John Stevens, managing director, Asteco Property Management
“Owner occupiers and investors were keen to enter the market as rental rates were on an upward trend, which indicated better returns and potential for capital appreciation in the medium term,” added Stevens.
Asteco said the areas that came out on top for villa sales year-on-year were the Palm Jumeirah which jumped 67 percent reaching AED3,000 ($816) per square foot and Jumeirah Village Circle which rose 55 percent achieving AED850 per sq ft.
The rest of the freehold markets grew between 22-30 percent, Asteco added.
In terms of apartment sales, Asteco said Discovery Gardens increased by 83 percent to AED825 per sq ft, followed closely by Dubai Marina with growth of 81 percent at AED1,900 per sq ft and Downtown Dubai which recorded a 69 percent rise to AED2,200 per sq ft.
“We anticipate that 2014 will see a continuation of the trend witnessed in the previous year with sales prices increasing, albeit at a slower pace, as approximately 25,000 residential units are forecast for completion this year,” said Stevens.
According to Asteco, the residential leasing market also witnessed significant growth across all developments researched with average prices up by 22 percent for apartments and six percent for villas in Q4 2013.
Rental growth was driven partially by continued unrest in the region, Dubai’s winning Expo 2020 bid and an expanding economy, the report noted.
The highest growth rates year-on-year for villas were recorded in Mirdif, where a three-bedroom unit now costs AED140,000 on average per annum, a 40 percent increase; villas in Arabian Ranches rose 30 percent to an average of AED215,000 per annum for a three-bedroom house.
The most expensive area remains The Palm Jumeirah – a three-bedroom villa there costs AED350,000 per annum on average.
Apartment rental rates grew most in International City, with a 76 percent increase up to AED45,000 annually for a one-bedroom unit.
In contrast to the residential market, Asteco said the commercial market saw little movement during 2013. Overall leasing activity was relatively slow, but significant improvements were witnessed in terms of the amount of enquiries and size requirements.