Property price growth slows slightly in Dubai

Property price growth has slowed in Dubai with the latest report showing villa prices up 6% and apartment prices up 3% in the first quarter of 2014.

The data from real estate services company Asteco indicates that price growth levels have fallen after a sharp increase at the end of last year just after it was announced that the emirate will be hosting the Expo 2020.

However, the firm said there are concerns regarding unsustainable pricing in the residential leasing market where apartment and villa rates grew by 5% and 3% respectively in the first three months of the year.

The report also said that there is increased interest from potential investors in competitively priced off plan developments offering attractive payment plans. This could be due to many buyers now facing a higher cash requirement due to the new law regulating Loan to Value (LTV) ratios for those applying for mortgages.

More than 3,000 units were launched in the first quarter of 2014 and notable off plan apartment projects include Mulberry Park Heights at Mohammed Bin Rashid City, Atria in Business Bay, Palm Tower Residences on Palm Jumeirah, and Celestia Serviced Apartments at Dubai World Central.

Villa launches capturing market attention included Yasmin and Rasha at Arabian Ranches, Mira Oasis at Reem and Trump Estates at Akoya, it said.

‘There were significant increases in unit prices in the fourth quarter of 2013 following news of Dubai’s Expo 2020 win and we saw deals flounder as sellers with genuine offers decided to wait in anticipation of further growth. Transactions slowed down in established communities where surging prices went beyond what buyers were willing to pay,’ said John Stevens, managing director of Asteco.

‘Now we are witnessing growth in secondary residential areas, which are attracting prospective purchasers looking for more sensible asking rates with potentially better growth potential,’ he added.

The report also shows that DIFC apartments were the best performers in terms of percentage performance gains, rising by 9% in the first quarter with prices per square foot ranging from AED1,800 to AED2,300. Jumeirah Lakes Towers also saw healthy growth of 8% at AED1,100 to AED1,500 per square foot.

Villa sales price gains were led by moderately priced developments such as Al Furjan and Jumeirah Village, recording 22% and 15% growth respectively, with prices per square foot ranging from AED1,000- to AED1,200 and AED 850 to AED1,100.

‘We anticipate this trend to continue throughout 2014 but with more moderate sales price growth forecast for the second half of the year,’ Stevens said.

In the rental market, the best performing rental areas in the first quarter of 2014 were International City and Jumeirah Lakes Towers both with 11% growth and Dubai Marina up 10%.

The established family friendly community, The Springs, topped the villa rental sector, up by 13% in the first quarter of the year with a three bedroom villa commanding AED220,000 per annum.