The Dubai Property market is continuing to grow in line with the wider economic recovery in the Emirate, according to a report out from Citi.
Stronger visitor numbers, and strength in the retail markets is filtering through to the real estate sector says the report, with stronger trade and higher oil prices a key factor in the growth.
The report goes on to say that Dubai has actually benefited from what it calls a ‘misfortune dividend’ where investors have turned to safe havens in a response to the Arab Spring.
Citi’s chief economist Farouk Sousa quoted figures from Cluttons which showed that mid-range properties have increased in value by 20% over the last year.
“This is below the 30%-40% annual gain in property prices during the pre-2009 boom but, according to CBRE, represents one of the sharpest gains in the property sector anywhere globally this year,” he said.
The banks have a critical role to play in the continued resurgence of the markets by providing liquidity to not only end-users, but also contractors and developers.
City says that the increased investment in property in Dubai is allowing real estate companies begin to strengthen their balance sheets and improve credit ratings to be able to refinance loans.
Sousa also added that the recovery has been experienced mainly in prime locations, but that there was still an overhang of supply in both residential and commercial markets.
“Our own estimates suggest that the current stock of housing exceeds demand by some 50,000 units (15% of total supply),” he said.
While current stock may well outstrip the demand in the market in developing areas, these developments will quickly be filled by the growth in the population and the strong increase of expatriates coming to Dubai in the wake of the prolonged European and American economic crisis.
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