Dubai property market on road to recovery

After several years of falling
prices, Dubai’s property market is showing signs of improvement in early 2012. At
the start of 2012, property prices showed their first quarterly rise since 2008
with investors increasingly confident about homes in the emirate.

However, the property market in
Dubai may remain uncertain, as we explain here.

Demand for villas remains high, pushing up property prices in Dubai

The National reports that prices of property in Dubai have increased
due to a combination of improved trade and tourism in the emirate and a ‘return
of investors’ confidence’.

According to data compiled by the
Economics Group at the National Bank of Abu Dhabi, average property prices in
Dubai increased by 3.7 per cent in the first quarter of this year from the
previous quarter.

Prices of villas in the city also
continue to rise on the back of stronger demand at the same time as villa
rental rates increased by around 5 per cent.  The newspaper reports that the demand for villas in
established areas such as Palm Jumeirah and Arabian Ranches remains high thanks
to existing tenants upgrading their accommodation to take advantage of the
current favourable market rates.

This has helped push up the price
of property in Dubai.  In addition,
mortgage providers in the United Arab Emirates are currently offering
competitive mortgage deals which have benefited buyers and boosted property
sales.  Mortgage lending in the
emirate rose by over a third between 2010 and 2011.

The National reports that:
“Although Dubai’s property market has improved in recent quarters, it might be
too early to judge whether the underlying recovery trend is sustainable, given
the continued supply of new properties, the European debt crisis and the global
economic slowdown.

“However, the downward spiral of property
prices in Dubai has clearly been arrested.”

Author : Nick
Marr