Committed to development
The year 2013 has seen a broad-based price and rental recovery across Dubai's realty market. Though the total value of property transactions for the year will be known only in early 2014, transaction value in the first nine months of the year crossed AED162 billion with the emirate now donning the cap of the best property investment destination across the globe.
UK-based Knight Frank and Global Property Guide have stated that property prices in Dubai jumped by over 20% in the past year, the pace being the fastest among the cities that the organisation tracks. The prospects for the next year look equally bright, with a predicted 10-15% price increase in the loop.
However, the biggest debate over the last year by analysts has been whether the Dubai housing market was experiencing another bubble like that in 2008. Rising property prices have been accompanied by scenes of hundreds of people queuing in the heat 48 hours before an Emaar property launch in February and confrontations on the sidelines of the Cityscape property show in October as potential investors attempted to get their hands on off-plan flats. Investors were warned against property flipping, one of the major causes of the 2008 crash, where people invested in developments only to make a sale to pocket a quick profit.
The government took quick measures to allay fears, setting into motion a series of controls for the market. The Dubai Land Department announced that it would be introducing seven new laws for regulating the property market and to ward off speculators. In September, the first was rolled out - doubling the property transfer fee from 2% to 4%. The next month, the Central Bank revised its mortgage regulations (which has just gone into effect), capping the amount of money homeowners were allowed to borrow.
Market growth slowed down during the third quarter of the year with the new regulations in place. However, Dubai's win to host the Expo 2020 has kicked off another surge in development and rise in property prices. For the year ahead, growth is predicted to continue full steam ahead. Whether market controls will be strong enough to avert another property bubble is yet to be determined.
Most industry players, however, believe that new regulations will help control growth.
"2013 was a great sentimental boost for all Dubai residents," said Hamzah Abu Zannad, director of operations, Royal Star International to Gulf News. "The market has performed very well and most important, check values were placed to cool down any overheating activities. We believe that more regulations are yet to be implemented." Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. The year 2013 has seen Dubai's property market skyrocket, making it the fastest growing market in the world. The prospects for the next year look bright, driven by Expo 2020 developments. We hope our round-up of key stories and expert opinions have helped trace the changes that have happened over the year, while giving an idea of what the future holds for the city. In the year ahead, we will continue to track the latest developments in this rapidly growing market. From IMEX Real Estate, we would just like to wish all of you a very Happy New Year!