Growth in a stable market
For some, growth in the real estate sector has to be measured in increasing rents, greater sales and a frenzy for new developments. While there's no doubt that Dubai's property sector has slowed down, there are other factors to consider when measuring growth.
That Dubai is seeing a stabilsation in house prices is no news. Property agent JLL reports that Dubai apartment prices showed no growth between October and December 2014 and villa prices actually dipped by 1% in the final three months of 2014.
The emirate's real estate crash was a result of a property bubble, with unrealistic increases being made to home prices and most purchases being made only to turn over a profit. Dubai has come a long way from that. In fact, the market has taken a very clear turn towards focusing on the needs of end-users as homeowners. Mohamed Alabbar, chairman, Emaar Properties, noted:
"Dubai’s real estate market will be driven by homeowners, and not by speculators as in the past, and this is a great sign of a maturing market.”
At the same time, developers are fully confident that there will be continued demand for property in Dubai as populations increase ahead of the Expo 2020. The emirate is set to welcome 25,000 new units in 2015. Developers are also pushing ahead with their off-plan launches as scheduled, rather than waiting around to see prices increase. Reef Real Estate, on Tuesday, launched the 38-storey Reef Residence, which it says is the first tower project at Jumeirah Village Circle. In the first phase, units will sell for AED770 a square foot, and thereafter the “average blended price” would be AED885 a square foot.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. Undoubtedly, home prices are not increasing at the rapid pace they were early last year. However, developers are pushing ahead with new projects, confident that the demand will be there for these new developments as the country enters a phase of growth. It's evident that Dubai's real estate market has learnt that growth is possible, even in a market that maintains a sense of stability.