New supply ‘won’t hurt Dubai property scene’
Dubai, April 18, 2012
The demand for property in Dubai is rising at a much faster rate than supply, and concern over supply issues has been greatly exaggerated, said an industry expert.
“For the past 12 months Damac Properties has seen prices increase across the luxury segment of Dubai’s real estate market,” explained Niall Mc Loughlin, senior vice president of Damac Properties.
“The report by Knight Frank substantiates our own outlook. We are experiencing the strongest demand in three years across our range of premium developments at Dubai Marina, Downtown Dubai, Business Bay and the DIFC,” he added.
Dubai house prices rose by 2.3 per cent in the last three months of 2011, according to the latest Knight Frank Global House Price Index.
While the high end of the market is recovering quickly, the UAE real estate market has become increasingly fragmented which means there is little benefit in reviewing the market as a whole.
Demand and prices are rising convincingly in premium locations within Dubai, but these price gains are to some extent being offset by price declines in some of the Emirate’s less sought after locations.
There is a strong flight to quality in both Dubai and Abu Dhabi, as existing residents seek to upgrade and new buyers aim to take advantage of market conditions which currently offer extraordinary value for money.
While there is a definitive two-tiered market in the UAE, even within that there is further fragmentation. The occupancy rates for different developments in the same locations can vary wildly.
People are now identifying with particular developments within certain locations and are basing their decision on which apartment to rent or buy primarily on which developer completed the project.
Property experts Asteco have also pointed out in their first quarter report that developments in established locations are now approaching full occupancy and that rents are increasing.
The occupancy rates of Damac Properties’ more established towers The Waves and Marina Terrace in Dubai Marina are as high as 94 per cent and 97 per cent respectively, said Mc Loughlin.
More impressively, occupancy rates in the more recently handed over developments such as Ocean Heights and Emirates Gardens are 91 per cent and 95 per cent respectively.
“Occupancy rates are an excellent indicator of where the supply and demand dynamic is currently. With occupancy rates close to 100 per cent, you would have to say that supply and demand is roughly in equilibrium” said Mc Loughlin.
Real estate adviser Cluttons said in a recent report that Dubai’s residential property market was "now more secure and transparent," with residential sales continuing to build on "a positive start to 2012."
“The market dynamic is changing so quickly that people are finding it difficult to keep up. For three years everyone has been talking about how bad the Dubai real estate market is that they’ve failed to notice the upturn. You will start to see the positive momentum build very quickly from this point onwards,” added Mc Loughlin.
Dubai’s economy is expanding, and that is also beginning to stoke investor confidence. The economy grew by 3.3 percent in 2011 and is predicted to expand by 4.5 per cent in 2012, according to estimates from the Dubai Supreme Fiscal Committee.
“Reports of increasing demand are being reflected in our diminishing supply of inventory in our completed projects. At Damac Properties we have very few apartments left in our projects which have been handed over, and we are now seeing investors shift their focus to projects which are more than 60 per cent complete” Mc Loughlin concluded. – TradeArabia News Service