Dubai realty price index shows steady growth

Dubai realty price index shows steady growth

Dubai’s real estate and property sector grew exponentially at 30% (in 2006) much higher than the average growth rate of 21%. This trend has very much continued into 2007 wherein UAE’s non-oil businesses accounted for a growth of AED 455 billion (US$ 124 billion), one of the highest in the Middle East. Currently, the sectors of Finance, Real Estate, Tourism and Hospitality account for around 65% of UAE’s GDP, which in the past constituted primarily of oil-based revenues.

Total investment in the UAE till date for 2008, driven largely by the non-oil sector is approximately AED 144 billion (US$39.2 billion) at a growth rate of 19%. The soaring price of crude in the International markets has benefited the global investor to accumulate wealth. This has consequently been invested in global realty and UAE constitutes a majority of this realty investment.

Epitomes of Dubai’s property prices are as afore-mentioned. The current prices of residential apartments in Dubai average AED 1461.68 per square feet (US$ 398 per square feet)*. Featured below are the figures for Studios, 1 bedroom, 2 bedroom and 3 bedroom apartments at various developments across Dubai in January 2008.

(Compiled by Gowealthy Research Team; Sources include Gowealthy Archives, Developers’ Availabilities & Resale Classifieds. The survey covered randomly selected properties at Dubai Marina, Business Bay, International City, Discovery Gardens, Dubai International Financial Centre (DIFC), Jumeirah Lake Towers, Culture Village, City of Arabia and Dubai Sports City, Dubai Silicon Oasis and International Media Production Zone (IMPZ). Calculations based on the average square feet price of 1291.6 square feet at prominent city centres in Dubai.)

Having analyzed the prevailing rates at various districts in Dubai, we conclude that the demand for both high-end and low-end housing is growing and that the trend of rising prices will extend beyond 2010. In 2006, the rates for residential units in Dubai averaged US$ 465.9 per square feet; in January 2008, they stood at US$ 505.1 per square feet.

Supply demand theory dictates global trade and there is a perception that Dubai’s property market too follows this dictum. Our research makes us conclude that despite surplus of properties (by timeline 2010) property prices will yet be north. The reason being that by the end of the decade, the sector envisages stability through tools such as the introduction of Property Index, Dubai Real Estate Corporation (DREC), Condominium, Strata and Owners’ Association Laws which will provide specific guidelines for developers, buyers and sellers. Property Index in particular, is expected to have a major impact on the property trading trends in Dubai.

Dubai’s property market being in its nascent stage, is charting a Property Index . This means tenants in the UAE who often have to pay different rates for the same types of properties will have a guideline and so will landlords. Property Index is meant to alleviate all price and rental discrepancies. In addition, it will serve as a guide to trading in the property sector.

Dubai Real Estate Corporation (DREC) plans to have a database of the UAE's land and property assets, which represents 30% of all commercial property in the e mirate. DREC is expected to be in a position to release unused land for commercial development and thus encourage foreign investment in public sector real estate by private firms which means establishment of PPP (Public Private Participation) in the United Arab Emirates.

Watch this space next week, as we discuss the potential of Abu Dhabi property market in detail, providing you with in-depth analyses of local construction and hospitality segments.