Figures posted by Dubizzle showed price increases of up to 29 per cent for a three-bedroom home on Dubai’s Palm Jumeirah, with a 30 per cent rise for a similar unit in Abu Dhabi’s Al Raha Beach.
Property prices in Dubai and Abu Dhabi rise for 3rd consecutive quarter
DUBAI // Home prices and rents in Dubai and Abu Dhabi have continued to rise for the third quarter in a row.
Figures posted by the classified website Dubizzle on Tuesday showed prices rose in the past quarter by up to 29 per cent for a three-bedroom home on Dubai’s Palm Jumeirah, with a 30 per cent increase for a similar unit in Abu Dhabi’s Al Raha Beach.
But market experts have questioned whether the trend can continue, especially in Dubai after an increase in fees for buying new homes.
The Dubai Land Department announced it will double transfer fees for new property from October 6 to 4 per cent of the unit value in a move to curb “flipping”, or selling a newly bought property quickly for a small profit, by speculators.
Analysts say the rule could limit further growth in the market.
“Buyers are just going to stop buying,” said Mario Volpi, managing director of Prestige Real Estate.
“They will eventually say that they’ve had enough and they will start voting with their feet.”
Mr Volpi said the higher tax should have been limited to people buying to resell a property, not end users – those buying a unit to live in it.
“People don’t see why they’ve hit the end users as well as the flippers,” he said. “With this blanket rule they are castigating everyone.”
Ann Boothello, property marketing specialist at Dubizzle, said it remained to be seen if prices would continue to grow in Dubai.
“The doubling of the registration fee has taken many aback but has surely come about as a means to cool down the market,” Ms Boothello said.
“We expect to see this reflected in our next quarter stats in terms of prices, but the Dubai real estate market auto-adjusts.
“Investors here will adjust over a short span of time to the increased fees, despite the initial reaction. It is the end user that will take slightly longer to come around.”
But if Dubai is successful in its bid for Expo 2020, the host of which is due to be revealed next month, it could continue to bolster prices.
“We are keen to see how these two factors will reflect in our price stats next quarter,” Ms Boothello said.
She said price increases in Abu Dhabi were also fuelled largely by the ruling that employees of government companies and departments must live in the emirate.
Ms Boothello said prices were expected to balance out when about 17,000 new units became available on the market this year.
Third-quarter statistics for Dubai were also released on Tuesday by the property-management company Asteco.
They suggest that, compared with the same period last year, villa and apartment prices grew by 26 and 42 per cent.
The largest price rises were in Discovery Gardens, which grew by 75 per cent from last year to Dh700 a square foot.
For villa sales, Jumeirah Village was the standout, increasing by 50 per cent to Dh750 a square foot.
Rent also increased by 23 per cent for apartments and 19 per cent for villas.
The traditionally low-cost development International City saw the biggest growth in apartment prices, with rents for one-bedroom flats increasing by 35 per cent.
The biggest rent jump for villas was in The Springs – up to 34 per cent for a three-bedroom home.
John Stevens, managing director of Asteco, said he believed trends would continue despite the doubling of registration fees.
“I believe it remains to be seen whether the growth in real estate prices seen in recent months will continue at the same rate with these recent changes,” Mr Stevens said.
“However, with demand far outstripping supply for property in the residential sector, we believe that the rentals and sales prices will continue to rise.”