Residential property prices in Dubai could return to a level last seen at the peak of the emirate’s real estate market in 2008, it is claimed.
According to real estate firm Jones Lang LaSalle prices will continue to grow in 2014 after recording growth of 22% in 2013. But the pace of the growth is likely to be slower.
Rents are also expected to see growth after rising 17% last year. In 2014 growth of 10% to 20% is predicted, depending on location.
Craig Plumb, JLL head of research for the Middle East and Africa, said that prices of properties in some high quality properties in prime locations have already reached the 2008 peak.
But, overall the residential property market remains about 15% below 2008 levels but could see return to those heights by the last quarter of 2014 or early 2015. Prices are have fallen by up to 60% in some locations.
Plumb does not expect the rapid price increases this time around to result in another bubble.
Prices in 2013 in Dubai did increase at an unsustainable rate but when we look at 2014 we're expecting there to be continued price growth but not at the same level that we saw last year,’ he explained.
He also pointed out that the market has become more mature with government regulatory changes and a more cautious outlook from developers, such as phasing projects, as well as measures to combat flipping being introduced means that a bubble is unlikely.
However he warned that the industry could not rely on the government to stabilize the market. ‘There is a bit of a tendency in this market to say it will be all right because the government will regulate the market. I think it's important for the real estate market to take some responsibility about that,’ said Plumb.
There also will be greater supply coming onto the market this year. About 27,000 units are due to be completed, although Plumb expects only about 20,000 to meet their targets.
The firm also expects financing to be more varied and fewer developers relying on pre-sales. Instead, developers would phase in projects according to demand and build according to requirements.
This article was republished with permission from Property Wire.