Experts at Jones Lang LaSalle say Dubai’s residential real estate market is finally recovering after hitting bottom, while neighboring Abu Dhabi continues to struggle. A property index published by Reiden.com shows Dubai’s home prices rose 7.5% for the year in January, but prices in Abu Dhabi dropped 4.1% in the same time period. The overall price measures, however, belie varied performance across different types of real estate. Although Dubai is posting positive numbers, the only sector seeing marked improvement are villas and apartments smaller than 50 square meters. For more on this continue reading the following article from Global Property Guide.
There are already signs that Dubai property market is recovering while its neighboring Abu Dhabi, UAE’s capital, is still struggling.
"Dubai is close to the bottom. I don’t think Abu Dhabi has reached the bottom yet," said Craig Plumb of Jones Lang LaSalle UAE.
The Dubai residential property price index (RPPI)—all residential, published by Reidin.com, rose by 7.5% in January 2012 from a year earlier. In contrast, the Abu Dhabi RPPI—all residential dropped 4.1% over the same period.
However, this conceals price movements for different property types. During the past several months, prices of villas have been rising while apartment prices continue to plunge. During the year to January 2012:
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Reidin’s Dubai RPPI covers seven cities, eight main districts and four major developments. On the other hand, the Abu Dhabi RPPI covers seven cities and four main districts.
Dubai’s most desirable districts like Emirates Living, Downtown Dubai, Dubai Marina and Palm Jumeirah have experienced healthy house price rises in the past several months. In contrast, house prices continue to fall in less desirable areas like International City and Dubailand.
The total value of property transactions in Dubai rose by 14% to AED142.9 billion (US$38.9 billion) in 2011, according to the Dubai Land Department. Property sales in Abu Dhabi rose by 5% to AED4.3 billion (US$1.2 billion) in 2011, according to property website Bayut.com.
In Dubai, about 23,000 new housing units are expected to enter the market in 2012, according to Jones Lang LaSalle MENA. In addition, around 24,000 dwelling units are expected to be completed in Abu Dhabi in 2012, according to property consultant Asteco.
The huge increase in supply will inevitably have an impact on property prices in 2012. In addition, the regional political unrest and the Eurozone debt crisis aren’t helping the UAE’s housing market.
Abu Dhabi house prices are predicted to fall by about 10% in 2012, while house prices in some of the most desirable places in Dubai are expected to remain stable or rise modestly this year, according to local property analysts.
To help Dubai’s housing market and boost investor confidence, the government recently announced that foreign property buyers in Dubai will be given a visa for three years instead of just six months.
This article was republished with permission from Global Property Guide.