Is Dubai Property Really In Recovery
News Posted On: 03 October 2012
As far as titles go, "worst affected property market by the worst financial crash known to man" is one Dubai would be grateful not to have. Alas you have to play the hand you are dealt, and it has to be said that Dubai has done that well, although being part of one of the world's richest oil nations would help dig anyone out of a financial hole. But we are not here to talk about that, we are here to answer whether or not Dubai is really in recovery and, it is.
When positive reports started coming out of the country in the middle of 2011 (month on month price increases in one sector or another, rent growth in one or two districts etc) it was easy to bin them. There was still too much negative data, and still far too many properties in the oversupply column.
But now, as the positive reports have continued to build, the negative reports shrink to nothing, and the month on month price increases are joined by their year on year counterparts we are all forced to rejoice in the happiness of a Dubai property market finally in recovery after some 60-70 per cent price crash in the space of 3 years.
According to the Knight Frank global house price index the turnaround was Q4 2011, when quarterly price growth went from -1.8% in Q3 2011 to +2.3% in Q4 2011. In Q4 last year the annual growth was also 0.5%, which pushed Dubai up the table from 47th out of 50 in Q1, in the same bottom 5 it had languished in since the crisis began, up to 26th position -- halfway up the table. After slipping back to 29 with flat quarterly growth and -1.1% annual decline in Q1 of this year, Q2 sees it back up to 23 with prices up 1% on the quarter and 2% on the year.
According to real estate agent Cluttons apartments in Dubai have increased in value by an average 4.9% since the beginning of 2012. This is important because while villas have been responsible for much of the sporadic positivity throughout 2011, apartments continued to suffer. Cluttons predicts a continuation of this trend towards the end of the year. In addition, apartment rental values have increased 6.8% in Dubai.
According to the Dubai Land Department, Dubai property transactions grew 21% to AED 63bn (£10.8bn) in the first half of 2012, compared to Q3 and Q4 2011.
But it is more than just price and sales growth; it is a general feeling of confidence and vitality in the sector that is the biggest sign that we have turned a corner. Like the reports of "renewed energy" being witnessed by developers worldwide showcasing over an estimated $100 billion in new mega-projects in the UAE region at the 11th inaugural Cityscape Global property developers conference being held this week in Dubai.
More importantly according to several real estate analysts at the event, most residential buyers of tens of thousands of Dubai condos are coming from such places as India, Iran, Pakistan, Russia and the UK.
Tourism is also growing. Dubai International Airport reported over 4.8 million passengers going through their airport last month, a twenty per cent increase from one year ago. In addition, Dubai's airport has had over 37.8 million visitors in just the first 6-months of 2012; a similar level of traffic to that enjoyed by world-class Orlando International Airport by visitors drawn to Walt Disney World.
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Written by Les Calvert
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