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In the UAE, with its low homogenous population, economic growth is accompanied by an increase in population.
The global financial crisis resulted in large job losses, with the resultant population drain from the UAE.
However, with the economic environment starting to stabilize, government spending staying robust and providing the adequate stimulus, businesses will be expected to start increasing their head count over the next 12-24 months.
And finally, the UAE economy is more than just real estate driven, as we see evidence of this through transactions in our firm by individuals that are working in a wide array of business sectors.
Adversity is a great teacher, and now, transacting in real estate has shifted away from the speculative and euphorically emotional approach of the last couple of years, to being driven by economic fundamentals.
It has been reported that prices in popular areas around Dubai have risen between 5% and 10 % over the last few months. Moving forward, pricing trends are going to be determined by the combination of several factors that include demand versus supply for each property segment, mortgage availability, rental values, rental yields, seller motivation and population growth.
Villa communities
In the villa segment, the main established communities are Emirates Living, Arabian Ranches, Jumeirah Islands, Palm Jumeirah and the Green Community. Each community has developed a reputation over time, offering a variety of living options and associated pricing.
In the two to three bedroom townhouse space, Springs, Al Reem and the Lakes are the primary options. Pricing in this segment has recovered significantly from its lows in the early part of 2009 and is now stabilized to the Dhs1.3m - Dhs1.4m range for two beds, while a three bed unit is around the Dhs2m-Dhs2.3m range for Springs and Al Reem, and in excess of Dhs3.3m in the Lakes.
Though Palmera and Alma in the Ranches development also provide two and three bedroom townhouse options, since these were launched at higher prices than the current prices of similar properties, they are not being actively traded, other than for rental.
For units in the Springs, Al Reem and the Lakes, financing is easily available, they are fully functional communities with no new significant inventory planned in the future. Therefore, we expect pricing to remain stable at these levels, and perhaps see some additional increases of another 5% after the summer, until such time that the Jumeirah Village communities are available and being delivered - towards the end of 2009.
The Jumeirah Village project is expected to add significant inventory to the townhouse segment, which will most likely have a capping effect on any major price rises in this segment across Dubai until this inventory is occupied.
Impact of supply
Independent villas are spread across Emirates Living, Arabian Ranches, Jumeirah Islands, Palm Jumeirah and Green Community, with inventory being added in Victory Heights, Jumeirah Park and Jumeirah Golf Estates. Within this segment there is further segmentation in the mid- to luxury level properties.
Moving forward, in the mid-level segment such as the Meadows, Lakes, Saheel, Mirador and so on, we expect pricing to continue to increase due to the restricted supply and limited additional inventory in the market.
Staff
