Caution over construction boom
The overall Dubai Residential Price Index showed that rents rose almost 20% over the last year. Apartments saw a larger jump in rents, growing 21% while villa rents rose by just 10%, according to the latest report by CBRE.
UAE inflation reached its highest in more than five years last month as rising rents and food prices push up the cost of living. The consumer price index rose to 2.2% compared to the same period last year, up from 2% in May, according to data from the National Bureau of Statistics.
However, rising prices hasn't had an affect on demand. Over AED113 billion worth of real estate transactions have been recorded in the first half of 2014 - a figure nearly double the amount recorded the same time last year. Dubai developer Damac Properties said that its latest project sold out in one evening, Arabian Business reported. Nearly 300 luxury apartments in Loretto, which is located in Damac's Downtown Akoya project and overlooks a private park similar to Hyde Park or Central Park, were sold during a suhoor taking place in six venues across the UAE.
Construction has continued full speed ahead as well. Sobha Developers have launched a new mixed-use development within the Mohammed Bin Rashid Al Maktoum City - located just three kilometres from Burj Khalifa. Meanwhile, leading property developer Nakheel is bringing a new, gated master planned community of 1,000 villas to Dubai, as part of its business expansion strategy.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. Undoubtedly, there has been a surge in construction in the Emirates with skyrocketing rents. However, most experts agree that growth levels will be lower than 2013 with affordability becoming the driver of new trends. What overall affect this will have on stabilising the market is something that we will just need to wait and watch for.