CBRE reports positive first-quarter performance for Dubai real estate, which many are taking as a sign of recovery for the region’s struggling residential property market. Prices of villas are up 3% and one- and three-bedroom apartments climbed 2% for the first three months of 2012. This is the first time the market for villas has seen such improvement since its 60% price plummet in 2008 in response to the growing global financial crisis. Although the pace of residential real estate is picking up, experts say commercial property prices will remain flat for the year as management uncertainties and available supply suppress increases. For more on this continue reading the following article from Property Wire.
The price of villas in Dubai increased by 3% in the first quarter of 2012, in a sign that the emirate’s beleaguered real estate market is back on track.
he latest report from global property consultants CBRE also shows that the price of apartments increased. One bedroom flats saw prices increase by 2% and three bedroom apartment prices were up by 2%.
The report indicates that the prices of villas in prime locations such as Emirates Living, Arabian Ranches and Palm Jumeirah is likely to remain strong during the rest of the year.
It said that the residential sector would see area specific strengthening of rents, sales and occupancy rates as pipeline supply in developed locations becomes increasingly scarce.
However, new supply will enter from emerging areas such as Jumeirah Park, Al Furjan and Jumeirah Golf Estates, which will result in an expanding villa inventory over the next 12 to 15 months.
The outlook for the villas market follows strong performance during the first quarter of the year during which it experienced positive rental rate growth for the first time since 2008/2009. It is good news for the sector which has seen prices fall by up to 60% since the peak of the market at the end of 2008.
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The highest increase in lease rates took place in the two bedroom sector which saw an increase of 5%, followed by five and six bedroom units which both increased by around 3%.
Data from the Dubai Land Department shows that residential unit transactions during the first quarter of 2012 totalled AED3.1 billion, a 9% increase compared to the previous quarter.
Developments such as Emirates Living and the Palm Jumeirah have now shown positive growth over the last three quarters.
Overall lease rates in Emirates Living have increased by 6%, according to the CBRE data.
Within the emirate’s freehold areas, the highest increase in lease rates took place in the Greens, up 7%, followed by Downtown Dubai, up 6%.
CBRE also said Dubai’s commercial property market is likely to remain flat in 2012 as new supply keeps rents below 2005 levels.
Around 171,500 square meters of new office space entered the market during the quarter, of which 76% is held on a strata title basis.
‘The significant increase in stock, together with uncertainties regarding the management of strata title properties, is causing very low absorption rates for these types of properties,’ the report said.
‘Dubai’s CBD is expected to see further improvement in occupancy levels due to limited new stock, the availability of fitted office space, increasingly competitive lease rates and landlord incentives. Secondary and tertiary locations will again struggle in terms of occupancy and lease rates as supply is comfortably exceeding demand in these areas,’ it added.
This article was republished with permission from Property Wire.