Dubai real estate professionals are reporting a surge in prices that is pushing some residents away from popular neighbourhoods.
Some letting and estate agents have seen rents climb by as much as a fifth and sale prices by more than two-thirds in the first half of 2013.
Asteco – which deals with both sales and lettings in the United Arab Emirates (UAE) – average rents for flats was up 20% in the first six months of the year, while rates for villas increased 17%.
Flats sold at up to 38% over prices at the end of December 2012, while villas recorded a 24% increase.
The biggest price difference was in the Discovery gardens neighbourhood, where flats were selling at 75% more at the end of June 2013 than at the end of December 2012.
Rental cap
“Many residents just cannot afford to rent or buy in some neighbourhoods because prices are rising at such a fast rate, “said Asteco managing director John Stevens.
“They are moving to cheaper, less developed neighbourhoods due to rent increases, and more people are likely to move away from the popular areas as rents are likely to keep on going up.”
“We expect to see landlords asking for higher rents that are higher than existing rates because new tenancy agreements are not subject to rental cap laws in Dubai.”
Property agents disclosed that prices have not slowed, despite an increase of new developments opening that have increased supply in the market.
International property firm Knight Frank reported Dubai home prices were up 18.3% in the first quarter, in another survey published within the past few days.
This was the highest property rise for all the cities tracked by the firm worldwide in the quarter. The average global increase was 0.2%.
Highest prices since 2008
UAE property portal Bayut also confirms home values moving up in almost every neighbourhood of Dubai – and claims this is the best performance in the emirate since 2008.
However, the portal cites much lower increases than Asteco and Knight Frank – suggesting flats and villas saw a 9% price rise in the first quarter of 2013 and a 1% increase in rents in the same period.
“Dubai has a much improved property market that is out performing nearby Abu Dhabi,” said Zain Nadeem, of Bayut.
“While rents have soared in Dubai, they are reportedly going down in Abu Dhabi.”
