Developers up their offerings
The realty market in Dubai is all set for a fresh burst in the area of construction with hundreds of new apartment projects being started and released this year, leaving little doubt that the market is seeing a significant rise in demand. Much of the resurgence in the sector has been driven by the country's strong economic fundamentals, safe haven status and growing interest from regional and international investors.
Since the beginning of the year, Emaar Properties has launched five new projects (which has, interestingly, also reported a 48% increase in profits). Meanwhile, Nakheel has announced sales for land plots in master developments while also revealing information about the launch of its Palm Tower Residences. Overall, there has been a surge in developments in the Palm area.
Key areas of interest for future developments include Downtown and Business Bay, which are seen as being the best option for new developers to enter the market. "There are limited new plot options available at these locations now, and they are the ones where values are recording some of the highest growths in Dubai," said Ravi Pillai, chairman of the Bahrain-based RP Group.
Interest in the UAE is also not confined to just Dubai anymore. Buoyed by the growth in the emirate's realty sector, developers are looking for first-mover advantage by taking on projects in the northern emirates and bringing in buyers in their wake. Ras Al Khaimah, for example, is recording a steady topping up of new releases. "We do see increased interest in this market, not just from existing and new investors, but also end-users who are priced out of the Dubai market," said John Steven, managing director, Astenco Project Management.
"In the current market where everybody is getting excited about real estate, asking prices rise more quickly than achieved prices, which means that the gap between the two is widening," said Craig Plumb, head of research at Jones Lang LaSalle's Dubai office. He says asking prices are about 20% higher than achieved prices. Meanwhile, according to property broker Asteco, house prices in Dubai increased by nearly 60% last year and the website propertyfinder.ae noted a 45% increase in average values in Dubai's key neighbourhoods over the same period.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. Demand for property is at an all-time high, resulting in a rush off new projects as investors seek a piece of the market. It can be challenging to make a decision on which area to invest in and we'll be sure to follow latest trends, highlighting affordable communities and those with high-growth value.