Price growth slows down
Finally, there is some respite for those looking to invest in Dubai realty as there seems to be some stability in asking values.
Prime residential prices in Dubai rose by just 0.6% during the first three months of 2014, signalling a slowdown in growth in the emirate's booming real estate market. According to Knight Frank's latest Prime Global Cities Index for Q1, Dubai's price growth between December 2013 and March was lower than the global average and way down on the 5.4% growth seen in Q1 last year.
According to Chandrakant Whabi, CEO at Acrohouse Properties, "A 5-10% softening does seem to be there across the board in the city's freehold locations. Most of the buying activity spike released by the Expo win as well as those trying to acquire properties before the mortgage cap came into effect was over [by early 2014]. In the last two or three months, residential prices have been steady while those in commercial make gains."
In fact, Emaar Properties said that its revenue from villa sales dropped by nearly 17% in the first quarter of the year as it extracted more income from malls and hotels instead. The builder generated AED256.91 million from sales of villas in the first quarter as compared to AED308.73 million in the corresponding period in 2013, a detailed earning statement revealed.
For end-users, however, there still needs to be immediate access to sizable funds to buy property in Dubai's market. According to a new Cluttons report on first-quarter trends, the need to save up larger deposits means that the transition from the rental market to owner occupation will take longer.
The good news for home owners is that banks in the UAE are keen on helping investors, since they have collateral by way of the first property while any new arrangement helps deepen their relationship with property owners over a longer term.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. Market trends seem to be correcting themselves since it had become apparent that the market would not be able to sustain continually increasing prices. With developers announcing a range of new projects, there are plenty of opportunities for those looking to get onto the Dubai bandwagon, especially now when there is more stability than there has been for a while. According to Whabi, "For market dynamics to have sustenance, there was a need for price growth to slow down."