Home prices rise in further hope for Dubai property

Home prices in Dubai rose this month, showing more signs of stabilisation in a market that has seen prices fall by as much as 40 per cent since October, analysts said yesterday.

Average prices increased by about 6.5 per cent to Dh1,285 a square foot in 13 major locations around Dubai compared with the previous month, according to a report by Deutsche Bank.
Nabil Ahmed, an analyst at the bank, said the price rises were probably the result of “easing pressure from distress sales and potential remaining sellers now being unwilling to sell at current prices”.

The prices could also be rising because of volatility caused by the small number of transactions, Mr Ahmed wrote in the report, concluding that while the transactions showed the worst of the property downturn to be over, there could still be additional declines of between 15 and 20 per cent by the end of the year.
The data from Deutsche Bank follows modest price rises last month, which broke a nine-month streak of declines caused by the global financial crisis and property downturn.

Transactions also appeared to be on the rise this month. From June 16 to June 23 alone, there were 1,018 sales, mortgages and leasing transactions in Dubai, compared with 439 in the week before, according to REIDIN.com, a website that receives daily information directly from the Dubai Land Department.

The number of transactions was the most since a peak earlier in the year from distressed sales.

Vincent Easton, the sales director at the property brokerage Engel and Voelkers, said people were taking advantage of available options now that prices had declined to more affordable levels.

More people who were sharing apartments are moving out on their own, families are looking to upgrade from apartments to villas, and many buyers and renters are looking to move to more attractive neighbourhoods, Mr Easton said.
“There are a lot of positive signs out there,” he said. “It’s started to reach a fairly reasonable level.”

Mr Easton said he had also seen a greater degree of interest in the quality of the home when someone was buying or renting.

In the boom times, people would close deals without proper inspections of the property. Now, they are looking for homes with better locations, finishes and landscaping, and are willing to pay a premium for these qualities.
The market was also starting to pay closer attention to some neighbourhoods that were hit hard by price declines, Mr Easton said. Jumeirah Lake Towers, for example, lost many tenants to the more developed Jumeirah Beach Residence and Marina.

But now that the Bonnington Jumeirah Lakes Towers hotel is closer to opening and more buildings are being completed, there is renewed interest.

“After months of people leaving in Jumeirah Lake Towers, they are now starting to return,” Mr Easton said. “There’s a postcode effect going on where people are aspiring to certain areas. We’re starting to understand that better now.”