Dubai house prices up 42% in quarter
By Suzanne Fenton
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2 Min Read
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Dubai: House prices have increased 42 per cent in Dubai between the last quarter of 2007 and the first quarter of 2008, according to a report released on Tuesday by global property consultants Colliers International.
“This 42 per cent is based on the facts we received by these five financial institutions, which we have collated into this report,” John Davis, chief executive officer of Colliers Middle East, told the media at a round-table on Tuesday.
“There has been a general increase in prices in Dubai in 2008, and not just for property. There has been an increase in building material prices and diesel prices and inflation. They all affect house prices,” Sadallah Abed, property analyst at Colliers, said.
“Higher rents are encouraging people to buy rather than spend on renting,” Abed added.
The report shows residential rental rates in Dubai average out at Dh950 per square foot, making buying property a cost-effective alternative.
Colliers International yesterday launched their first House Price Index (HPI) for Dubai. Davis said the report was developed for Dubai’s residential market, to reflect the average state of growth and decline of real estate prices in the sector.
Data was collected from five institutions for the HPI. The institutions include HSBC Middle East, Barclays Bank, Amlak, Dubai Islamic Bank and Emirates NBD, which represent 40 per cent of the total market. Amlak alone represents 25 per cent of this.
Davis said 40 per cent was a “large basket to draw from”. The HPI covers 13 communities in Dubai, across all freehold expatriate zones.
Catherine Clarke, associate director for consultancy services said, “We’re seeing an awful lot of end-users. People are becoming more stable here in Dubai and a lot more people who can afford to buy because the competition in the mortgage market is vast.”
The report shows that the average rate per square foot for residential property in Dubai in the first quarter of 2008 was Dh1,579.
Apartment prices have risen 82 per cent since the first quarter of 2007, villa prices have increased 85 per cent since then and townhouse price have risen 29 per cent, the report said.
The average rate per square foot for apartments in the first quarter 2008 was Dh1,841. The average rate per square foot for villas in the same quarter was Dh1,338 and the average rate per square foot for townhouses was Dh1,024.
These increases are due partly to the rise in construction costs. According to a Construction Cost Bulletin, produced by EC Harris, construction costs are set to rise 18 per cent to 20 per cent by the end of 2008.
For future reports, more financial institutions will be involved. Colliers will develop a similar index for Abu Dhabi when the secondary market “starts to kick in”, said Clarke.
