Dubai residential market continues to see a robust broad-based growth, supported by increasing positive sentiment and renewed confidence in the market according to Jones Lang LaSalle’s Dubai Real Estate Market report for the third quarter of 2013.
In Q3-2013, the privately-managed REIDIN Residential Sale Index grew by almost 18% Y-oY and 6% Q-o-Q, but remains 15% lower than its peak value. Villa prices rose 14% Y-o-Y while the apartment sale price index increased by 15% Y-o-Y. Despite the strong growth, apartment prices remain 19% below their peak values. International City recorded the strongest price growth with a 27% Y-o-Y increase, highlighting the strong recovery in secondary locations.
On the leasing front, the REIDIN Rent Index climbed by 15% Y-o-Y and 6% Q-o-Q. The villa rent index went up by 14% Y-o-Y and appeared to have reached its peak value, while the apartment rental index scored a 15% Y-o-Y growth but remains 19% lower than its record level. International City was again the top performer in terms of rental values growth, followed by JLT, The Greens area and Sports City; while JBR recorded slowest growth. This supported the conclusion that secondary locations have been improving as tenants continue to relocate from the expensive areas to more affordable neighborhoods.
International City was again the top performer in terms of rental values growth, followed by JLT, The Greens area and Sports City; while JBR recorded slowest growth. This supported the conclusion that secondary locations have been improving as tenants continue to relocate from the expensive areas to more affordable neighborhoods.
The residential market has carried on with its broad-based recovery, on the back of growing positive sentiment, the status of Dubai as a “safe haven”, a rising population and solid economic fundamentals. Despite the government‟s initiatives to prevent a bubble, the dominance of cash buyers could lead to a period of unsustainable growth in prices.
Residential supply
At the end of Q3-2013, the total residential stock in areas monitored by JLL stood at around 364,000 units.
The third quarter of 2013 saw the handing over of more than 3,400 residential units. The main projects completed include The Nakheel villas compound in Jumeirah Park, The Villa-stage 3 in Dubailand (306 villas), Burjside Boulevard by DAMAC in Downtown Dubai (351 units), Suburbia by DAMAC in Downtown Jebel Ali (104 units). Other projects have been delivered in International City, Dubailand, Dubai Sports City, Silicon Oasis and TECOM among others.
An increasing number of residential projects are currently being delivered as developers are taking advantage of the positive market sentiment to re-start previous stalled developments or hand over new ones. In the first nine months of 2013, more than 9,000 residential units have entered the market, around 50% more than the number of units handed over during the same period in 2012.
According to developers, around 45,000 residential units are under construction and are expected to enter the market by 2015; but in reality some of the projects might be delayed beyond their scheduled dates.
The majority of the future completions will be located in the submarkets of Dubailand (16,000 units); Dubai Marina (3,700 units); Dubai Sports City (3,600 units); Business Bay (3,000 units); and Jumeirah Village (2,800 units).
Improved confidence, economic growth and rising demand have encouraged developers to announce new large-scale projects. The most notable announced developments include the Mohammad Bin Rashid City; Akoya by DAMAC; Dubai Sustainable City; Jumeirah Island Park by Nakheel; in addition to several announcements by Emaar such as The Hills, Burj Vista in Downtown, The BLVD and The Address Residences. These announced projects are likely to be ready by 2016 at the earliest.
