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05 March 2024

Prices rise 17%, but Dubai luxury property still cheap

Rents in Dubai Marina and Jumeirah Beach Residence are set to increase as the Dubai Tram now becoming operational. (Ashok Verma)

By Parag Deulgaonkar

Dubai’s prime luxury property market continues to remain affordable in comparison to key global cities despite prices rising by 17 per cent in 2013, Knight Frank’s Wealth Report 2014 reveals.
The UK-based real estate consultancy states that in Dubai one can buy 146 square metres of prime property for US1 million (Dh3.67 million) compared to only 15 square metres in Monaco, 20.6 square metres in Hong Kong, 32.6 square metres in Singapore and 25.2 square metres in London.

For US$1 million, one can buy 41.2 square metres in Sydney, 41.7 square metres in Paris, 43 square metres in Moscow, 46.2 square metres in Shanghai and 95.7 square metres in Mumbai.
Among the 20 cities surveyed, Dubai is placed 19th on the list with Cape Town taking the last slot; US $1 million can buy 215.1 square metres there.

In terms of price growth tracked by Knight Frank, Dubai was placed seventh among the list of 10 global cities surveyed. Abu Dhabi took the eighth slot on the list.

As indicted above, Dubai saw a 17 per cent price increase, while Abu Dhabi registered a 15 per cent rise in 2013. The two emirates were the only ones from the Middle East to find place in the list of top 10 real estate markets.
Jakarta was placed first with a price increase of 37.7 per cent followed by Auckland 28.8 per cent and Bali, placed third, with a price rise of 22 per cent in 2013.
The consultancy pointed out that average property prices in Dubai were still below the pre-crisis highs, indicating there were no fears of bubble emerging.

Photo by Ashok Verma
Knight Frank’s Head of Prime International Residential Index Analysis Kate Everett-Allen said: “Inevitable debates have ensued as to whether Dubai and Dublin are on the cusp of another bubble. However, in both cases average prices have yet to approach, let alone exceed, their pre-crisis highs.
“Cash buyers are driving sales and regulation is tighter with some purchase and ownership costs higher than in 2008. This follows Ireland’s introduction of a new local property tax in 2013 and transfer costs in Dubai doubling to 4 per cent during 2013.”
Last month, JLL, a global real estate consultancy, ruled out a correction in property market, dismissing fears of property bubble, stating the market was “smarter”, investors were cautious, regulations were better and developers less reliant on pre-sales model to fund projects.
Citi said on March 2 that the current levels of construction activity, were not out of line with market fundamentals and were not creating distortions to overall economic growth that occurred in the lead up to 2008, when property market crashed.