Dubai's property market is showing signs of 'selective recovery,' according to the latest report from Jones Lang LaSalle
Recovery is in sight for Dubai property
The Dubai property market is showing good signs of recovery, with many neighbourhoods reporting the first increases in values since 2008.
Prices for luxury villas in such projects as Palm Jumeirah and Arabian Ranches rose 3 per cent in the second quarter, according to data released last night by the global property consultancy Jones Lang LaSalle,.
"We've talked about selective stability in the past, and now we can be more positive and talk about selective recovery," said Craig Plumb, the head of research for Jones Lang LaSalle.
Prices for apartments, meanwhile, continue to slip, easing down 1 per cent for the quarter, with an abundance of supply available, said the consultancy.
Agents said sales activity was still centred on very specific neighbourhoods, suggesting the market has still not entered a broad recovery.
"People are focused on quality," said Tom Bunker, an investment sales consultant for Better Homes. "We haven't seen much activity in the secondary stock."
Prices are down more than 50 per cent in a few neighbourhoods.
The latest data come as the Real Estate Regulatory Agency steps up the cancelling of delayed projects. Some Developers are challenging the cancellations, highlighting the legal disputes that continue to plague the market.
But political turmoil in some parts of the Middle East has helped to drive buyers to Dubai, Mr Plumb said.
"It's difficult to quantify, but agents say they are seeing more Arab nationals looking [in the emirate]," he added.
Several factors will continue to drag on the market in the months ahead, including an additional 18,000 homes scheduled for completion by the end of the year, Jones Lang LaSalle forecasts.
But most of the new supply is in "less established areas" such as Business Bay and Dubai Silicon Oasis, Mr Plumb said.
A number of freehold projects being completed in Abu Dhabi will also provide new competition for Dubai. "That will take away some of the demand for Dubai," Mr Plumb said.
But there are positive signs in the emirate's market after three years of steady declines.
"Certainly, toward the end of the year the recovery in the top end should continue," Mr Plumb said.
The report reflects what agents have been reporting in the market for the past six months - increased transactions with prices stabilising in many neighbourhoods.
"Things are actually quite busy," Mr Bunker said.
The perception of the market has changed in recent months as more buyers start to shop for deals. "Sellers are starting to dig in their heels now," Mr Bunker said.
Homes are selling for closer to asking prices, but only a few neighbourhoods are seeing increases, particularly high-end villas in projects such as The Springs, Palm Jumeirah and Emirates Hills, estate agents say.
Most of the new construction is apartments. By the end of this year, apartments will constitute 79 per cent of the homes in Dubai, according to Jones Lang LaSalle data.
"Prices are firming up, but not climbing in leaps and bounds," Mr Bunker said.
At the same time, buyers are targeting homes in quality projects and avoiding areas where there is an abundance of supply.
"They're very savvy," said Mario Volpi, the sales manager for PowerHouse Properties. "Buyers have done their homework."
Several factors could boost the market in the second half of the year, agents say, including the visa extension announced last week. That will allow property buyers to obtain residency visas for three years instead of the current six months.