The residential market in Dubai continues to grow with expected 10 to 15 percent rise in 2014, according to a recent report by HSBC Global Banking and Markets. Rental prices rose by 5.2 percent on annual basis so far in 2014. The big question is how well such increases are received by investors and and-users. Do they buy more highly-priced properties or rent more expensive homes willingly?
The HSBC Global Research report, which was released earlier in the month, reveals a steady growth of Dubai residential market and expects this trend to continue for at least another two years. Home prices are expected to rise by 10 to 15 percent this year, with stable net yields at 4-5 percent. Sale prices are going up 6.3 percent in the year to February 2014 and 23.8 percent in 2013, according to the report. It is not very clear how the bank came to such conclusions. Increased property prices do not automatically result in more sales. On the contrary – more expensive products are harder to sell. This fact may well explain the reduced number of property transactions registered in 2014 by the Dubai Land Department.
Previous analyses by London-based property consultancy released in December 2013 revealed similar numbers. It showed that property price growth would maintain higher, compared to the rest of the world in 2014. How accurate this data is and for what purposes is generated and publicized is another question. However, Dubai residential property prices increase is generally expected to be slower compared to 2013, according to the researchers, and the rise is going to be between 10 and 15 percent. Of course, major drivers for the growth remain certain buyer incentives and the development associated with World Expo 2020.
According to official statistics by the Dubai Land Department, real estate transactions have seen a steep rise in 2013. From AED 154 billion, they rose by 53 percent to AED 236 billion, with Britons and Pakistanis as top home buyers. The beginning of 2014 is slower.
Dubai’s residential market is not the only one attractive sector for investors right now. Office real estate is now offering a better yield, which is expected to remain stable. Compared to other cities within the EMEA territory, Dubai provides generally higher-yield options.
Yes, there are two school of thoughts one say it will rise to 15% and other give ample proofs that it won’t be. Anyways, I belong to the optimistic one and feel that property bubble is gulping once again at least weak signs are saying so.