5.34 AM Friday, 29 March 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:56 06:10 12:26 15:53 18:37 19:52
29 March 2024

Dubai villa prices jump 5% in Q3

Published
By Parag Deulgaonkar

Villa prices in Dubai rose five per cent in the third quarter 2011, thanks to the limited supply and believe prices will hold better in short to medium term, Jones Lang LaSalle (JLL) said yesterday.

Average asking prices increased from Dh9,840 per square metre to Dh10,335 persqm in the third quarter, while average achieved prices rose at a much lower rate of 0.6 per cent to Dh9,310 per sqm, indicating the gap between asking prices and achieved prices has begun to widen again in the villa market.

The global real estate consultancy, however, made it clear that that it dies not expect the increase in villa prices registered over the past two quarters to spill over into the broader residential market during the rest of 2011

“The chance of any recovery in 2012 will be dependent upon the rate of economic growth and end user demand for Dubai residential property,” it said.

Dubai is expected to see completion of 5,000 units by end-2011 and an estimated 27,000 units completion next year, leading to an increase in supply and delay in price recovery, the report said.

New completions during third quarter totalled 4,000 units, bringing the total residential stock to 326,000 units. Major completions in the quarter were Grosvenor House Residence in Dubai Marina, La Riviera in Jumeirah Village and Masakin in Jumeirah Park.

New supply in the fourth quarter will come from units in Dubailand, Dubai Marina and Sports City. As of September, approximately 56 per cent, or around 11,000 units, of the expected supply for 2011 has been completed.

Citing reports from valuers and property agents, JLL said an improvement in sentiment towards the Dubai residential market was witnessed over the first nine months of the year.

“Sellers have picked up on this improvement in market sentiment and are starting to increase asking prices of villas,” the report pointed out.

Yields decline

On the apartment front, most parts of Dubai saw either a slight drop or relatively stable prices indicating that the market might be very near its bottom. With rental rates dropping more than achieved prices, yields have decreased making Dubai less attractive to investors looking for rental returns.

“The market seems to be finally seeing some uptick in prices after almost three years of falls, recovery in demand could be delayed by negative sentiment and slowing economic growth in both Europe and the US,” JLL said.

Average rental for two bedroom apartments decreased by four per cent over third quarter to Dh82,000, while villa rents jumped two per cent.  However, this increase has been confined to villas on Palm Jumeirah and Arabian Ranches with average rents for villas in other areas such as the Springs declining marginally.