Cityscape: Dubai's property market benefits from regional unrest, but there are risks from a weak global economy, Jones Lang LaSalle says.
Demand for pricey villas draws investment
Demand for property in Dubai has been boosted by unrest in other parts of the Middle East, but has yet to drive prices up across the board.
A new report shows investment is flowing into the city's residential sector, with many buyers opting for expensive villas in upmarket areas, such as Palm Jumeirah.
"Investor interest and the amount of money seeking a home in the Dubai real estate market has increased during 2011, especially among investors from elsewhere in the GCC region," said Jones Lang LaSalle (JLL), a property services company.
These investors are buying completed, income-producing properties, and there is little demand for unfinished projects, it said.
The number of transactions and the prices are rising on Palm Jumeirah and Jumeirah Island, in part because of the turmoil in the other parts of the region, said the property developer Nakheel. "We see a lot of new faces," said Ali Rashid Lootah, the chairman of Nakheel.
"That has created demand."
However, JLL also warned that Dubai remained closely linked to the global economy.
"The question now is how long this [positive] impact will last before broader international issues undermine this upturn," said Alan Robertson, JLL's chief executive for the Middle East and North Africa.
"While the Arab Spring contributed to improved sentiment and stronger performance over the first half of the year, these benefits could be limited by the fluctuating financial concerns emanating from Europe and the US over the last few months."
There was a 31 per cent decrease in the number of property transactions in the second quarter compared to last year, according to data from the Dubai Land Department.
But the total value of transactions rose 59 per cent over the same period, the data showed.
* with additional reporting by Kevin Brass