Dubai's real estate sector shines again

Prices of apartments and villas in Dubai have gone up by up to nine per cent and 16 per cent respectively during the first half of this year, indicating that the real estate market is on the way to recovery after three years of decline.

According to a report by the property management firm Asteco, apartment rents have risen by up to 10 per cent and sales prices by 9 per cent in Dubai, while villa rents and sales prices increased by up to 13 and 16 per cent respectively during the first half of the year.

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This is positive outlook for H2 especially for quality developments. Quality residential developments in Dubai bounced back during Q2 2012 after a stable first quarter, with average rent increases of 6 per cent for apartments and 9 per cent for villas.

Sales prices recorded double-digit increases in three developments, with rises of 6-8 per cent elsewhere, according to the latest H1 2012 report from the leading UAE property management company.

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"After three years of declining rates and limited sales activity, the real estate market is on the way to recovery, with established quality communities showing increases in values and higher transaction volumes," said Elaine Jones, CEO at Asteco.

Rental rates for apartments were relatively stable through Q1 with minor declines in low quality/ poorly managed buildings in certain areas. Towards the end of H1 2012 rates in established quality communities achieved average increases of 6 per cent.

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"Tenants are relocating in search of value-for-money, one-and two-bedroom apartments as well as three- and four-bedroom villas are the preferred unit types. In terms of rates, quality well managed developments, will continue to set the pace," Jones said.

Leasing rates for villas followed a similar trend, stable throughout Q1 2012 with an average increase of 9 per cent through the latter part of Q2 2012.

"Looking ahead to the 2012 year end, sales prices will continue to rise for quality developments, especially villas.

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The number of owner-occupiers rose steadily in line with improved financed options offered by banks, which we expect to continue.

"Further demand will also be evident from overseas buyers escaping economic woes in the Eurozone and political instability in other parts of the region," said Elaine Jones.

It was a different picture for commercial space which, despite an increase in leasing enquiries in H1 2012 as the regional situation improved, creating renewed interest in Dubai as a hub for business, was hampered by oversupply and tenant-dictated contract terms.