Apparently the real estate market in Dubai could be on the verge of a recovery as property prices in prime locations have shown their first increase since the beginning of the recession. Prices of villas located in various luxury developments such as the Meadows, Arabian Ranches and Palm Jumeirah have increased by around 1% since the second quarter, and rents have increased by 0.7% during the same period.
The article in ArabianBusiness.com cited a report by property broker Cluttons, which found real estate in desirable areas has held its value, or seen prices increase. The first quarter of the year was affected by unrest throughout the region and overseas, but now it does look as if the first green shoots of recovery can be seen. However the report went on to warn that property price rises have not been seen in all sectors, as apartments and property in less desirable areas are continuing to be affected by oversupply, and there are another 10,000 to 15,000 new units expected to be finished by the end of the year.
This isn’t the first report to see signs of improvement in the prime property market, as Jones Lang LaSalle recently said prices were near rock bottom and that even though villa sales volume has dropped by nearly a third, the value of villa sales has increased by 59%, showing higher-priced properties are proving to be the most attractive to buyers. Experts think developments with finished community facilities are most likely to reap the benefits of a rejuvenated real estate market as they are seen as offering value for money. Projects between Sheikh Zayed Road and the Dubai Marina, where tenants have access to community facilities due to completed infrastructure, are seeing prices stabilize.
Since the global economic crisis property prices in the emirate have decreased by more than 60%, and nearly half of the projects have been cancelled or put on hold as developers struggle to repay bank loans and contractors.