23/04/2013 09:47 AST
Signalling a resounding return of investor confidence in Dubai, real estate prices and rents recorded a 16th consecutive monthly increase in March, underscoring a steady and sustained recovery of the property market, a report by Deutsche Bank said on Monday.
Property prices increased by 1.5 per cent from February to March across most areas, while prices and rental values remained significantly below their peak of 2008, the bank said in a research report. Apartment prices that remained between 43 per cent and 61 per cent below peak were up 1.5 per cent on a month-on-month basis. Villa prices that remained between 12 per cent and 49 per cent below peak prices were up 1.6 per cent in March. Rental values show similar trends, the report said.
“The price recovery that started in late 2011 in prime properties is now spreading to second tier communities including JLT [Jumeirah Lakes Towers]. Despite new supply [mainly in secondary locations], investor confidence remains strong, while main master developers are accelerating project launches,” Deutsche Bank research analyst Athmane Benzerroug said.
According to the report, the year-to-date growth in property prices rose to over 6.2 per cent. Despite this recovery, shares of real estate developers trade at a discount to emerging markets and world developers, it said.
The bank said in its report that the growth in prices and investor confidence continued despite increased supply. Since the second half of 2011, Dubai has witnessed an increase in project launches by master developers such as Emaar, Nakheel and Damac. Nakheel has restarted various projects while Emaar recently pre-sold four projects with over 1,000 units sold overnight with prime units selling at a 40 per cent premium to market prices reflecting trends seen around the world. Emaar has now announced another project in Downtown Dubai that goes went on sale on April 20, it said.
Despite the growing confidence in the market and the 1.9 per cent increase in share prices seen in March, UAE developers continue to trade at a discount to emerging markets and global developers, Benzerroug said.
“On a price-to-book value and a price to earnings multiple, UAE developers trade at a discount to emerging markets and international developers. UAE developers are trading at a 0.6-times 2013 price to book value versus one for emerging markets and 1.4 times for world developers,” he said.
Property consultants Jones Lang LaSalle, or JLL, said in a report that Dubai residential property sales prices rose by about 18 per cent in the first quarter of 2013 compared to the year-earlier period, even as 2,200 units were added to the stock inventory.
The JLL report noted that the real estate investment market in Dubai, which now has a residential stock of 357,000, became very active in the first quarter of 2013 with a growing number of residential transactions closing. Over the next two years — 2013-15 — the residential supply will grow by 42,000 units. In 2013, Dubai will add a total of 28,000 units, the report said.
According to Cluttons, the average prices for high-end villas in Dubai are up by nearly nine per cent over the past six months. In its market report for Dubai’s residential market, Cluttons said positive economic activity driven from tourism and business has led to fresh property developments and confident property investment throughout the UAE. Luxury villa prices have increased on average by 8.9 per cent over the six months ending March 31 this year, even as mid-range villas have experienced gains of 14.9 per cent over the same period.
Khaleej Times
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