Dubai’s property market recorded the largest year-on-year average price increase in the second quarter, according to London-based property broker Knight Frank.
Knight Frank’s Global House Price Index stated the average property price in Dubai surged 21.7 per cent between second quarter 2012 and second quarter 2012.
Helen Tatham, Director of Residential at Knight Frank in UAE, said the increase was a correction on pre 2012 second quarter market activity.
Tatham said the Arab Spring and tougher European tax regimes had led to an increase in property investment by expatriates.
Deepak Jain, Head of Strategic Consulting, MENA at Jones Lang LaSalle, agrees with Tatham.
He said along with Dubai being seen as a safe location for investment by Arab Spring investors it was also becoming the ideal location for Saudi, Kuwaiti, and Qatari investors looking to buy a second home.
Other factors lending to the higher average prices were that Dubai residents were now looking to purchase instead of rent due to increased rental rates and lower mortgages, Jain said.
Tatham said the Real Estate Regulatory Agency (RERA) control of supply flowing into the market had also impacted pricing.
Jain said that the prices could soften at the end of the third quarter next year when new supply enters the market.
Tatham said the market wouldn’t continue to rise by more than 20 per cent over the next 12 months.
Martin Cooper, Director, Deloitte Corporate Finance Limited — Real Estate Consulting, said: “There are a number of factors contributing to the strong growth of Dubai’s residential sector over the past 12 months. These include a growing domestic economy and increasing levels of in-migration to Dubai.”
Cooper said that although Dubai is out-performing its regional peers, “it is important to note that residential growth in the Emirate has been concentrated mainly in prime locations and that average rates mask a significant variation in performance in the city.”
Comparatively, the Global House Price Index found that the in the six months leading to end of second quarter 2013 prices were up by 14.7 per cent.
In the three months leading up to end of second quarter prices were up by just five per cent.
In comparison Taiwan (7.4), Estonia (5.2), US (7.1), Lithuania (5.4), all had higher average property price percentage growth than Dubai in the three months leading to second quarter 2013.
The report found that Greece recorded the largest annual fall in mainstream prices for the fourth consecutive quarter, declining by 11.5 per cent. “For the first time since 2010, European countries recorded positive annual price growth. However, the average 0.7 per cent uplift over the past 12 months masks a sharp divergence in performance between individual countries,” the report stated.
Turkey was the strong performer with 12.2 per cent growth, and Greece was the weakest.
Europe recorded positive annual growth for the first time since 2010 but it is the poorest performing global region, the report stated.