Property prices in parts of Abu Dhabi and Dubai are registering big increases as buyers regain their confidence, brokers said Tuesday. In Dubai, they listed areas where prices had increased by up to 12 per cent last month. In Abu Dhabi, a few properties that were close to delivery on Al Reem island had received offers of up to 30 per cent higher than the previous couple of months.
After a lull of about eight months in which average prices fell by up to 30 per cent in the capital and 40 per cent in Dubai, buyers have returned. This is the third consecutive month of price rises, according to brokers, but many bankers and analysts are still cautious about saying the market has levelled out, with some predicting further declines. According to Gregory Antioch, a senior sales negotiator at the Dubai property broker Smith and Ken, a three-bedroom villa in The Springs, an established residential community developed by Emaar Properties, that was selling for between Dh1 million (US$272,000) and Dh1.5m in May now has a price tag of Dh2m.
Mr Antioch said a two-bedroom villa was now priced at Dh1.4m, compared with Dh1m in May. He said prices of homes in The Meadows and The Greens, also projects by Emaar, were up by 7 per cent and 5 per cent respectively. "People are less hesitant and are prepared to spend a bit of money," Mr Antioch said. "It's mostly end-users realising it's cheaper to buy than rent. Distressed sales have pretty much gone."
Buyers started to trickle back into the market in April, when the first signs of price stabilisation emerged. A report by HSBC bank at the end of May said agreed selling prices in the UAE rose 5 per cent in May compared with April, on top of April's 4 per cent gain on March. Last month, Deutsche Bank reported an average price increase of about 6.5 per cent to Dh1,285 per square foot in 13 major locations in Dubai last month, compared with May.
Brokers say the trend has remained steady with villa prices in some areas of Dubai, such as The Springs, rising between 10 per cent and 12 per cent since May. On the Palm Jumeirah, a reclaimed island development by Nakheel where prices fell by as much as 40 per cent between September and November last year, brokers claim prices have risen by up to 20 per cent since a "low point" in March. According to Richard Pemberton, a broker at Edwards and Towers, May and last month were the company's busiest months since about September and October last year.
Mr Pemberton said a four-bedroom Garden Villa on the Palm is now valued at between Dh7.5m and Dh8m, compared with Dh6.5m in March, while a basic apartment in the Shoreline Apartments is now valued at Dh1.9m compared with Dh1.7m. "Once it got to a point where prices had stabilised and didn't fall for two weeks - effectively 'the bottom' - things picked up," he said. "Buyers on the sidelines were waiting for this to happen. Villas that were worth Dh6m or Dh6.5m got snapped up."
Mr Pemberton added that most sales were now being driven by end-users - those who buy properties to live in them - rather than speculators. "A lot of people who couldn't afford to rent or live on the Palm Jumeirah a year or two ago are now interested in living there." In Abu Dhabi, brokers said there was an increase in prices and sales last month, compared with April and May. According to Mukambar Djurajeva, a property consultant for Engel and Volkers, prices started to pick up after the Cityscape Abu Dhabi property exhibition in April.
"There was a time when the market was dead, from January to March, with owners putting down their prices during the crisis," Ms Djurajeva said. "But [after Cityscape] they thought 'wow, I can sell now', and immediately put their prices up. It was very crazy." For example, prices for a near-completed property in Tala Tower, at Marina Square on Al Reem Island, went up from a low of Dh950 per sq ft in April to Dh1,250 today, Ms Djurajeva said, representing an increase of about 30 per cent. "Now there is nothing less than Dh1,250."
Prices of property elsewhere on Al Reem Island are about Dh1,100 per sq ft. "But the only thing we are seeing selling on Al Reem Island at the moment is anything around Marina Square, which is about to be finished by the end of this year or beginning of next year," said Susan Cronin, from Aljar Properties. The most expensive project in Abu Dhabi is Al Bandar residences at Al Raha Beach, where properties are selling for about Dh1,400 per sq ft.
Properties on the rest of Al Raha Beach are being offered for between Dh1,100 and Dh1,200 per sq ft, brokers say. "Al Raha Beach is a more demandable area right now compared to Al Reem Island," said Ammar Asaad, the head of sales at Hamptons for Abu Dhabi. "There is also a question of confidence. Al Raha Beach is being developed by one developer, which is Aldar, whereas Al Reem has many developers."