The cost of accommodation in UAE increased at a rapid pace in 2012, with prices of villas and rents climbing up by 23 per cent and 17 per cent, respectively.
The upward trend in property prices is expected to continue in the coming months. As investors showed renewed interest in the real estate market, villa prices increased at the highest rate in four years. The prices of apartments jumped by 14 per cent in 2012.
The market has made a strong recovery in the aftermath of global financial crisis and witnessed a higher number of transactions in 2012. According to Asteco, the real estate services firm, highest increase in price and volume was seen during second half of the year. The prices of apartments and villas rose by 9 per cent during the final three months of the year.
Villas in the Springs district saw steepest increase in prices, with their values rising by 38 per cent to Dh 9,700 per square meter. Jumeirah Islands and the Arabian Ranches also attracted heavy buying activity and their prices increased by 28 per cent and 27 per cent, respectively. Value of apartments at Palm Jumeirah increased by 27 per cent, while apartments at The Greens also increased by an estimated 23 per cent.
John Stevens, managing director at Asteco Property Management, predicted that, “the recent clarification by the UAE Central Bank that it will not impose any immediate loan-to-value caps on UAE banks, suggests that existing LTV ratios are likely to remain unchanged, in which case Asteco forecasts that the sales market will enjoy continued growth in 2013″.
Similarly, the rental cost of residential projects also rose by an average of 17 per cent in 2012. Most of the increase was seen in the final quarter of the year. During this period, prices in most of the projects jumped by an average of 7 per cent for apartments and 5 per cent for villas. As a result of the higher demand, dynamics of the UAE property market are bound to change. In well-developed and high quality living establishments, landlords would gain greater control due to higher demand for property.