2012 – The Year of the Optimist; 2013 – The Year of the Savvy Investor

As we close out another year, and begin to relax ahead of the New year celebrations, we take a moment to reflect back on twelve months which has redefined the property market in Dubai and consider what might be before us in 2013.

Villa prices have seen the most significant growth, during a year where each quarter has outperformed the last, with some areas seeing growth around 20 percent. Apartments are also back to 2010 prices (they won’t hit 2008 peaks until Q3/Q4 next year) with a year-on-year increase around seven percent across the board … much more than this at the luxury end of the market.

Key locations are still leading the market. Top-end properties in the Burj Area and Dubai Marina remain the most sought after, with serviced apartments the new off-plan opportunity.

Mega projects were again announced … a few teasers at Cityscape Global, before the real big announcements in the past month: ‘Mohammed bin Rashid City’, a multi-billion dollar project with the largest mall in the world (didn’t we already have one?) and a park 30 percent bigger than Hyde Park in London. Then, three days later, a AED 10 billion leisure and entertainment destination, which will begin construction next year.

So Dubai is back competing, announcing, building, and most importantly selling again. While there is some justified skepticism in the air as Dubai reverts back to the big bold announcements, there is now liquidity back in the market. Dubai is seen as the safe haven with Middle East investors moving their cash to the Emirate as the Arab Spring continues throughout the region. Buyers in Europe and America are coming to Dubai (especially the large institutions) as the EuroZone crisis and the ‘Fiscal cliff’ in the States still causes alarm.

So into 2013, and as DAMAC Properties’ MD, Ziad Al Chaar said recently: “2012 has delivered on our predictions at the start of the year – prices in the Dubai market steadily grew with each quarter outperforming the last. In 2013 buyers will definitely be able to benefit from this capital growth, but will need to be very savvy about where they invest and in which projects in each area.”

Stricter regulations continue to be integrated into the Dubai Property Market, new investment opportunities will open up (serviced hotel apartments will be the number one investment vehicle next year) and new locations such as IMPZ, Jumeirah Village and the Emirates/Al Khail Road area will jump in valuation as infrastructure completes.

“I believe that there has been no better time to invest in the Dubai property market in the past four years,” added Al Chaar. “New regulations, the filtering of the market following the correction and the increases in business and tourism coming to Dubai will it remains one of the most lucrative real estate markets in the world in 2013.”

Which direction do you think the Dubai Property Market will head in 2013? What impact will it have on rental prices and yields for owners? Are you looking to get into the market? We would love to hear from you in the comments section below, or joining us on Twitter, @dxbpropinvest.

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