Statistics released by Bayut.com, the leading UAE property portal, show that with every passing quarter, UAE is becoming more expensive. Property prices, which rose throughout 2013, continued their upward climb in the first quarter of 2014 and buried any speculation of a bubble.
During Q1 2014, property prices in the UAE experienced an overall hike of 35.90% compared to Q1 2013. For residential apartments, there was an average increase of 14.35% in prices compared to the Q4 of 2013 and a significant 36.56% gain compared to Q1 of 2013. Villa prices in the UAE also witnessed an average increase of 35.24% over Q1 of 2013 and an increase of 11.27% over Q4 of 2013.
Returns on apartment rentals also continued to ascend during the first quarter of 2014. Comparing to Q1 of 2013, Q1 of 2014 has shown an average increase of 17.79% for apartments whereas the average increase came in at 5.76% compared to Q4 of 2013. Villa rents also increased by 13.41% compared to Q1 of 2013 and saw a 6.46% gain over Q4 of 2013. The average rental yields recorded during Q1 of 2014 were 5.47% and 4.55% for apartments and villas respectively.
Dubai property market sees holistic growth in sales
In one of its recent reports, JLL ranked Dubai 3rd in its City Momentum Index which is an indicator of its strengthening economy and real estate. Another report by Knight Frank listed Dubai amongst the world’s fastest growing premium property markets. An HSBC forecast suggests that Dubai property prices are in for a 10-15% growth during the current year. While all of these reports may be coming from different sources, they do have one thing in common i.e. they all point towards burgeoning property prices in Dubai and trends observed by Bayut.com reflect the same.
Statistics for Q1 of 2014 show an average increase of 36.89% in prices from Q1 of 2013 and a 12.60% increase over Q4 of 2013 for Dubai apartments. The rise in average prices of villas comes in at 30.18% over Q1 of 2013 and a 4.64% over Q4 of 2013.
Dubai rentals continue their upward trend
Apartment rents have also seen a healthy increase at 24.57% over Q1 of 2013 and 8.29% rise over Q4 of 2013. Villa rents have also managed a similar rise at 13.77% over Q1 of 2013 and 9.20% over Q4 of 2013. The average rental yield during Q1 2014 remained 5.34% for Dubai apartments and 4.58% for Dubai villas.
Such growth in both sale and rental prices of residential units in Dubai depicts strong demand for these properties in the market. The evidence for this demand also lies in real estate transactional volume in Dubai, which increased by 53% in 2013 for an aggregate amount of AED236 billion per Dubai Land Department’s statistics.
This demand is not only coming from investors but also from job growth in Dubai over the past year. The non-labour population in 2013 has gone up by 7% compared to 2012 and Oxford Economics report estimates that Expo 2020 will create an additional 275,000 jobs over the course of next seven years.
Abu Dhabi realty sector finds its feet
Abu Dhabi property market has also seen improvement in Q1 of 2014. Knight Frank dubbed the city, along with Dubai, one of the world’s fastest growing premium markets and that is evident by the city’s healthy rental yields.
Abu Dhabi apartments have fared better than villas since they have witnessed a positive year-on-year growth as well as a sequential growth in prices. Villa prices also increased in the last quarter of 2013 and gained even more steam with the start of the year. The average cost of an apartment in Abu Dhabi went up by 25.98% compared to Q1 of 2013 and 3.51% compared to Q4 of 2013. Villa prices on the other hand increased by 21.68% over Q1 of 2013 and are up by 11.36% over Q4 of 2013.
Rentals slow to catch up in Abu Dhabi
On the rental front, things seem to have cooled down just a bit for Abu Dhabi with rents just hovering below where they were in the last quarter of 2013. They are still up compared to the Q1 of 2013.
However, the rental yield in Abu Dhabi stayed stronger than Dubai. Bayut.com’s statistics reveal that Abu Dhabi boasted a healthy rental yield of 6.84% and 7.00% for apartments and villas respectively during Q1 2014.
UAE could see deep, lasting recovery
The UAE continues to show signs of a strong seller’s market. As the cities grow outwards, secondary areas, which were not on the top list of investors, seem to be moving up the charts quickly. This is helping put a much broader and deeper recovery of the real estate market in place and giving a serious boost to investors’ confidence. On the other hand, 2008 is not in distant memory and the fast rise in prices has the individual buyers concerned about jumping into the market. However, these concerns are alleviated by sounder fundamentals, regulated governance, and a strong job market.
Haider Ali Khan, CEO of Bayut.com, feels that the market will remain stable during the summer period and will gather steam in the later half of the year. He reckons the summer would be a great time for potential investors and/or individual to jump in and grab good deals. Khan believes the property market is likely to see a 15-20% increase during 2014.
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